The Science and Art of Caclulating Trauma Sums Insured : The Value of Advice

Is there a right way for calculating the appropriate sum insured for trauma? Do you have a rule of thumb based on a multiple of income or a formula for removing debt? Or is there a science to our art whereby we can combine the emotional fall out and the true cost of disease to determine a sum insured?

Trauma cover, cover that provides a lump sum payment to assist an individual navigate through the treatment of a serious illness and focus on getting better not the stress of the financial strain, is where and when a quality adviser led insurance process is invaluable.

When my sister was diagnosed with a menigioma (a brain tumour that grows between the skull and the brain) there were a few things going for her:

· She’s a doctor and very quickly she had the best physicians around her
· It was thought to be benign
· It was operable
· She had income protection and trauma insurance

However what she had not had, was: advice. The policy for trauma did not make a payment. The income protection cover was inadequate relative to her salary at that point in time. Only through excellent financial advice post surgery was she able to maximise her income protection claim and secure an appropriate level and breadth of cover for income protection and trauma for the future.

As an adviser I worked with a rule of thumb for trauma. My best and most desired position was a sum insured that allowed for the removal of debt and the provision of one years income. My least favoured but lowest sum insured I would recommend was at least half a years income for the sum insured. Was this appropriate? That depends on the discussion I had with the client and their understanding with my guidance of the risks and outcomes.

Looking at the cost of disease in time and money provides some science to the process of calculating sum insureds. The Health Funds of New Zealand December 2013 report on the time of work due to sickness found that:

· An average of five weeks per person is being lost from the workforce as a result of surgical waiting list back-ups.
· Many thousands of New Zealanders waiting for surgery are having to take extended time off work, and also need loved ones to do the same so they can take care of them.
· 280,000 New Zealanders currently needed elective surgery with the average waiting time from GP referral to surgery in the public system was upward of 224 days.
· Almost a third of those needing surgery reported experiencing significant pain and said they had had to make lifestyle changes.
· More than half said their quality of life had worsened, mainly due to pain and mobility issues but also due to the psychological and financial stress of their ongoing illness.

A Canadian study, (Cancer and Work: A Canadian Perspective, 2011, Canadian Association of Psychosocial Oncology) reminds us of what we know only all too well that Cancer is a complex array of illnesses that can bring a potentially overwhelming spectrum of physical, psychological, social, emotional, functional and economic challenges. The paper concluded that there are broad reaching effects of having cancer on an individual’s worklife. And sadly that the development in the field of vocational rehabilitation and is fragmented and limited, in part due to its infancy.

This is where trauma insurance cover becomes incredibly important. Not only is the sum insured critical to allow required surgery and treatment to take place as soon as possible whatever the choice of treatment the patient embarks upon, but that they can do so without financial stress and further that upon recovery they have the resources to undertake vocational rehabilitation that can address the impact of the psychological and emotional strain of the disease and recovery.

The costs of disease, the financial cost to the individual and family must be also taken into account. As an example when considering the impact of Cancer the individual may also incur financial and economic costs, which are often overlooked when considering the impact of the disease (Cost of Cancer in NSW, 2007, A report by Access Economics Pty Limited for The Cancer Council NSW). This report found that non-financial costs are also very important – the pain, suffering and premature death that result from cancer. Although more difficult to measure, these can be analysed in terms of the years of healthy life lost, both quantitatively and qualitatively, known as the “burden of disease”.

Their detailed analysis found that, individuals bear around 40.4% of the total cost of cancer, with governments (42.1%), society (16.1%), family and friends (0.8%) and employers (0.6%) sharing the remaining costs. In regard to a dollar figure, the finding was this: that the total expected lifetime economic cost of cancer per person is around $966,000 – of which the burden of disease is $851,600 and the financial cost is $114,500.

Applying the 40% ratio, does that provide an appropriate sum insured of $386,000? Perhaps, there’s a science to that calculation. Does it match up against my old rule of thumb? In some cases it far surpasses it, whilst in others it falls short. What it does highlight is this: that not all diseases are the same, in fact this Cancer Council report found that brain cancers can be double the calculation above. Not all the impacts on an individual are the same. Psychologically my sister was well prepared, was financially stable and had a good support network. Should these factors, those emotional inputs be part of your fact find and deliberations in determining a sum insured? Perhaps.

What all of this, points to is the value of advice, the matching of the art and science behind providing an insurance solution for a client. As the cost of cancer as an example, increases, as people live increasingly complex lives within complicated family structures, the value of a trusted adviser to shape solutions, bespoke solutions, has never been more important.

Motivation : Getting The Very Best Out Of Yourself

So our planned post about socials communities is on hold! Because we wanted to uncover the core of your motivation.

We had the chance to speak to an individual yesterday with a valid goal and a thought out process but a fear of letting go of the past and accepting the positive of their future.

No one, repeat no one can motivate you.

Oh you can be inspired no doubt and the inspiration from a person or event can be highly emotionally charged and resonate so powerfully that you can't help but move forward with your goals. But unless you have discovered within the motivation that is self generated and as such self perpetuating then that brick wall looms large and fast approaching.

The pre game address from a great orator and coach can get you running onto the field revved up and that adrenalin rush leads to action that can get results fast. What happens when things get tough? In that third quarter of the game? Do the words in that pre game address cause our second wind, those heroic efforts that change the course of the game? Or is it what is inside use that leads to winning or just missing out?

Think about where you are right now.....in your business, in your sales year, in your relationship, in your friendships, in your life. Now imagine it is your third quarter in the game you are playing but the final whistle sounds now....that's it....game over.....where have you finished?

In your business have you achieved what you wanted? Are you ahead / behind?

In your sales year ....what percentage of target have you finished on.....is it 90% or is it 110?

In your relationship.....what have you missed out on doing that you regret...should you have proposed, started a family, said "I love you"......or should you have exited the relationship here, here, here and there!!

In your life.....do you look back and smile...satisfied.....or is there so much more you wish you could have done?

Now how does this all feel?

So you finished on 90%. Could you have made 100%, 110%? What more could you have done, differently, the same with more consistency ....if you had just more time what would you do to feel....better?

How does 90% feel knowing 110% was there if you had just tried that little bit more? If the voice in your head was less concerned about fear and more concerned about sending you positive messages.

And what if you are on 110% how does that feel? And knowing how good that feels...how does it positively change things for you and your world....what are the consequences of hitting your goal....so what do you need to do to capture that feeling, bottle the very essence of it....what would you do to make sure, guarantee you are going to feel that way.....and extra sales call a day .....?

So what if you should have spent more time with your family...one more hug, one more "I love you" that you should have said....or maybe your priorities are spot on and you know they know just how much you love them as you never left that to chance.

Understanding how you feel on reaching that future goal, what it would mean, what would change in your world ....is the first step in visualising and outcome to provide positive motivation to keep you on track ...you need to imagine how it feels emotionally and physiologically.....only then can you synthesise your body and mind to delivering that goal for you. The movie of your life becomes inherently positive ...it's the slide set you want shown at your funeral the movie you want to see over and over again. It's the Disney feel good, rising above the odds story.....not the B grade unlikeable character that no one warms to or respects...."I hated that guy in that film"....is that who you want to be?

But here's the rub. There is no finish line. When the final whistle blows, there is another game starting. There is always something else to work towards. Once you accept that then you are ready to accept that if you live your life like the final whistle is about to blow and as such make every second count then you can live without regret, able to smile at your efforts, reflect warmly and without questioning what if.

Finally this quote from poet Kim Rosen may resonate for you ...."when you welcome what you've been running from, your life is no longer shaped by trying to avoid it"......visualising the ideal you and working towards it is a great first step.

Can you really have it all......YES...but something's gotta give

YES!!! You can have it all.

But there is a price to pay.

That price is the acceptance to create new positive habits.

Even further, you need once on the path to reinforce those new habits until they become crystallise.

And over all you need to decide what are the things you need to outsource and stop do them yourself!

This has become so evident for PCE. First you may notice its been a month since our last post. With meetings with key advisers, with travel, with conferences and presentations, something had to give!

And most importantly PCE made a choice to creat a new habit.

6am starts in the office, 8pm boxing and gym work : was not working!

Well at least it was not working for family. And PCE needed to step back at look at what was really important.

Factor in a new habit, 6am gym, 7.15am family time over breakfast, and then 7pm dinner and we are done for the night apart from conversation with loved ones. Easy? Not really, suddenly 2 to 3 hours of work time per day were sacrificed and there needed to be a solution?

Let us tell you about Jan and Phil. Phil owns a small business. Phil said to PCE he was battling : trying to me a good husband, father, businessman, boss, trying to keep finances on track, maintain the house, keep fit, maintain friendships, look after his staff......something's gotta give.

Phil was telling himself lots of stories.....

We readily notice what’s wrong in our lives and react to it automatically – often at a cost to more thoughtful deliberation and effectiveness. Our core emotional need is to feel secure valued and appreciated.

The more we feel our value is at risk the more energy and time we spend defending it and the less energy we have available to create value.

So we develop influence over the stories we tell .......

We can develop stories to empower us rather than undermine. When we react as a default to telling negative stories we assign ourselves to the role of victim. It feels better not to blame ourselves for disappointments The victim role undermines our power to influence our circumstances.

The alternative is to look for where our responsibility lies in any given situation and then take remedial action to influence what we can control.

Awareness is key: being curious about how we respond changes us from being the subject of our feelings to making them the object of our observation.

Realistic optimism balances a hopeful and positive perspective with a recognition that the desired outcome may or may not occur.

We often look to those that inspire us for guidance. For PCE Chris Gardner is a source of inspiration.

For Chris its about Spiritual Genetics : the conscious choice to embrace the spirit within yourself : to embrace the best within you.

It involves a choice to : let go of judgement, allow yourself to heal, accept that you can have it all, embrace lessons of the past and grow.

Accept that where you are now is where you need to be and move forward : empowered, can do attitude, tap into your ingenuity, with a sense of purpose, inspiration to face fears, with perspective, ask questions, get support, and have an unstoppable passion for life.

So create new habits, make change but do it positively and looking ahead, leaving what you can't control and focussing on what it really important and being accountable for where your responsibility lies.


Chris Gardner : Start Where You Are – Life Lessons in Getting from Where You Are to Where You Want to Be, 2010, Amistad.

Tony Schwartz: The Way We’re Working Isn’t Working, 2010, Free Press The Energy Project : www.theenergyproject.com/resources