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In sickness and in health
10th May 2014

A thought provoking article which explains why having trauma insurance is important to protecting your financial health. Featuring expert comments from industry leader and HTL Director Lyall Bunn. 

Look around at all you have, think about all you hope for. It could be gone in a heartbeat.

Waitara man Stephen Sadler can hardly believe he's on the edge of such an abyss, can't quite figure out how his steady, peaceful life could so suddenly come crashing down

"He's still a stunned mullet," his wife Tania says.

Last month, after 13 years on the job at Taranaki Pine, Sadler was fired. The details are still up for debate and will be the subject of mediation later this month, but the reason and outcome are simple. He doesn't have a job because five years ago he had a heart attack.

Doctors' orders are he must avoid stress. Avoiding stress means he won't do certain jobs at the mill. This has put him at odds with his employer but Sadler says his sacking came out of the blue. "I can't sleep at night. I'm always thinking about it. What did I do wrong? I feel worthless now," he says.

With no qualifications and in poor health, he knows his chances of finding another job are slim. At 51, Sadler must confront the real possibility he will never work again.

"We'd just bought everything to do up the house," he says. "I wouldn't like to see this happen to anyone else."

Unfortunately it does. Every day ill-health and injury put people out of work. If you think it won't happen to you, you're the same as almost everyone else. But unless you're very lucky, you're probably also wrong.

Each year the Accident Compensation Corporation, the government's no-fault insurance cover, receives about 1.7 million claims. Last year it paid out weekly compensation to more than 76,000 people, or the population of the New Plymouth district, who could not work because of accidents.

It has on its books 10,000 people who have been receiving weekly compensation for more than a year, 3000 of these have lifelong impairments.

In 2013 the Ministry of Health released a study that put the life expectancy of New Zealand males and females at 78.1 years and 82.1 years respectively. But the number of years each could expect to spend in poor health was 8.9 and 11.5 years, more than 10 per cent of life. Some of that illness may not wait until you retire.

"Many consider health insurance and ACC will look after them. Very few think of the medium-to-long-term impact of not being able to work or undertake the job they are qualified to do should they be seriously ill or injured," says Lyall Bunn of New Plymouth's Heartland Insurance.

It's not helped by people often viewing their house as their main asset, he says, whereas their greatest asset is usually their earning potential.

"Most people are very optimistic they will be OK . . . it can be their undoing financially if things go wrong physically or medically," Bunn says.

And while health insurance and life insurance are well understood products, he says just 15 per cent of Kiwis have trauma insurance that can cover lost income resulting from illness or injury.

Being properly covered while away from work is one challenge, returning to work is another. The difficulty depends on several factors such as age, qualification and type of work and it is white-collar workers from large companies who may have the advantage, says James Dalrymple, the Auckland director of international recruitment firm Robert Walters.

"Large companies are becoming more proactive around flexible working hours, diversity - there is a conscious effort to remove any form of discrimination," he says.

"I guess where it is tougher is the small-to-medium businesses. With the scale issue they don't have the same capacity to absorb people who require more flexibility because of their health."

Employers were going to be concerned about getting sufficient productivity out of an individual and people re-entering the workforce after an illness or injury needed to reduce those concerns by demonstrating they could be flexible too, he says.

"The 55-plus job market will always be challenging. In respect to illness there is obviously an added complication there, but I think with openness and transparency they can get past that in many cases."

For 60-year-old Eltham man Phil Allen, openness and transparency have been his downfall. Forced out of work by a neck injury in 2012, the former maintenance engineer has since applied for more than 150 jobs. Most don't reply, some companies have asked him to stop sending applications. Only a few have told him straight his injuries make him a potential liability and he won't be hired.

From earning $1000 a week he is now on an invalid's benefit, he and his wife receive $247 a week on top of her $300 a week as a pastor. The change in circumstances have forced the sale of their five-bedroom house in Hawera. They now rent a two- bedroom house in Eltham and sometimes borrow from their children to pay the odd bill.

He wants to work, he says, but the window of opportunity is closing fast.

"Years ago you could walk into a place with a broken arm and if you had the skills they would take you on. Nowadays, with ACC and health and safety they don't want to know you because you are a risk.

"I didn't realise that until I started looking for jobs," Allen says.

"There is a gap in the system to help you. Basically you are 60 years old, they don't want you. You are on the scrap heap, see you later. Here's a couple of bucks to buy a loaf of bread."

Often the key to financial survival after suffering an injury at work, says Engineering, Print and Manufacturing Union assistant national secretary Ged O'Connell, is staying with the company where it happened.

"In our view, if someone is injured at work, our advice is to stay with that employer as long as they possibly can.

"It's a bit restrictive but you would expect there is some responsibility-obligation from the employer to look after their employees.

"But once they leave, if they are less than 100 per cent capable, they are disadvantaged when it comes to getting another job and that can follow them through their working life," he says.

Falling seriously ill at work was not an uncommon situation, O'Connell says, and in most cases employers were able to work with employees to facilitate their continued employment.

"You get the odd situations that is difficult but in most cases an agreement can be reached."

It needs to be. Once they lose their job because of an illness they may never be able to start again. "It is very, very uncommon to go to a new employer and say "I have a heart condition, or I have special requirements," O'Connell says.

"The employer generally doesn't look at them. Because they are taking on an unknown risk."

HEALTH AND INJURY NUMBERS

1.7 million – the number of claims the Accident Compensation Corporation receives annually.

76,000 – number of people unable to work paid weekly compensation by ACC in 2012/13 financial year.

10,000 – number of people receiving weekly compensation for more than one year.

80 – per cent of pre-incapacity earnings ACC pays.

78 – per cent of workers "returned to independence" within 12 weeks of being injured.

5 – number of sick days employees are entitled to.

20 – the maximum number of sick days employers are legally obliged to let accumulate.

600 – approximate annual cost of health insurance for single non-smoker in their mid-30s.

78.1 – Life expectancy in years of NZ male (2006).

8.9 – Years a NZ male can expect to spend in poor health.

82.1 – Life expectancy in years of NZ female (2006)

11.5 – Years a NZ female can expect to spend in poor health.

24 – the percentage of poor health caused by cancer in people aged 45-64.

16 – the percentage of poor health caused by vascular disorders in people aged 45-64.

37 – the percentage of the total population's health loss sustained by people aged 65+.

- Taranaki Daily News