What does the best* trauma insurance consist of?
Trauma insurance, sometimes known as critical illness insurance, is a type of insurance policy you can take out which a lump sum benefit if you are diagnosed or survived an illness covered by your insurance plan. The best trauma insurance cover should include:
- Enough coverage for your personal needs in the event of a serious illness
- Cover for a large range of serious conditions
- Additional benefits that give you comprehensive cover e.g. included child cover
You can find the best policy for you by comparing with an adviser or with a direct brand. Alternatively, continue reading our guide below.
Compare trauma insurance from direct brands
The best* trauma insurance policy of 2016 selected by the Australian Financial Review
The Australian Financial Review (AFR) rated the best trauma insurance policies in its yearly Blue Ribbon Awards. Some of the key features highlighted were cover for a range of critical conditions, amount insured and competitive pricing.
Best trauma insurance policy
|Trauma policy||Award||Policy features|
|BT Protection Plans: Life Insurance Plus||Best Trauma Insurance||Up to $2 million in cover. Policy is priced competitively but offers cover for a wide range of occupations and ages.|
|AMP Flexible Lifetime Insurance: Trauma Optimum||Highly commended||Wide range of features and the option to get cover as standalone or with life insurance.|
|MLC Critical Insurance Plus||Highly commended||Flexible cover that allows you to increase your benefits as your personal circumstances change.|
finder.com.au's most popular trauma insurance policies
These are the most popular trauma insurance policies on finder.com.au based on traffic data over a three month period in 2016:
|Trauma policy||Maximum trauma benefit||Number of conditions covered|
|ClearView LifeSolutions Trauma Cover||$2 million||44 (with the option of adding 13 extra conditions)|
|AMP Trauma Elevate Insurance||$2 million||46 (with the option of adding 11 extra conditions)|
|Comminsure Trauma Cover||$2 million||49 (with the option of adding 13 extra conditions)|
Trauma insurance can potentially cover a very wide range of issues. One of the problems when trying to find the best trauma insurance* is going over all of them, and not really knowing how good the cover actually is. More cover is generally better, but not if it’s covering rare and unlikely conditions at the expense of more common ones.
To find out how good a policy really is, consider the following:
- Trauma insurance will only pay benefits in the event of a specific injury or illness. The only conditions it will pay out for are those listed on the insurance product disclosure statement (PDS). The exact conditions covered typically vary between insurers.
- Some policies will pay out for certain disabilities. For example, some might include cover for things like paralysis or loss of speech regardless of how it happened, while others might specifically cover only certain injuries or illnesses that can lead to paralysis or loss of speech.
- The definition of medical conditions change with each brand. Make sure you find the definition for any listed conditions you are unfamiliar with in the policy.
- A trauma payout won’t always be the total sum insured. Many trauma insurance policies will pay out either a portion or the total sum of the benefits depending on the level of impairment resulting from the illness or injury. For example, blindness in one eye may result in a payout of 25% of the total sum, which counts towards applicable limits, while total blindness might pay out 100% of the sum insured.
- Some policies can cover hereditary diseases. If you have a family history of certain illnesses or conditions, such as dementia or multiple sclerosis, then depending on the condition in question, there’s a higher chance you could suffer from the same condition at some point. The right trauma insurance* will offer you hereditary cover.
- Some benefit payments may depend on how an illness was acquired. For example, certain policies might only cover HIV if it was occupationally acquired, such as if a practising nurse is accidentally stuck by an infected needle while on the job.
Will trauma insurance cover any condition?
Trauma insurance will only cover the conditions listed in the insurance policy. These are typically very specific, such as kidney failure, cancer, loss of one or more limbs, blindness and other severe issues. To find the best trauma insurance policy* it helps to know your options and what to expect from different policies.
The best trauma insurance policies* will generally cover more conditions than can be listed here, and these conditions will vary depending on the policy. However, almost all of them will cover the following in some form:
- Cancer. Provided it is diagnosed after you take out the policy and not before
- Heart conditions. Cardiac arrest, heart failure, coronaries, cardiomyopathy and other heart conditions
- Blindness or partial loss of sight. This includes lost eyes or illnesses that affect your vision
- Loss of limbs. Depending on how many are lost, you may be eligible for different payouts. The loss of one arm, for example, might pay out 25% or 50% of the total benefits, while loss of all limbs typically pays out 100%
- Organ failure. Heart, lung, liver, kidney and other organ failure
- Impairing illnesses. Motor neurone disease, muscular dystrophy, multiple sclerosis and other conditions listed in the policy
- Burns. Depending on their severity (first, second, third degree) and portion of the body affected such as 20% or more of the skin surface
- Deafness. Generally only payable in the event of total and permanent deafness
- Comas. Cover includes its ongoing costs such as maintaining life support systems
- Many other conditions are also covered by the vast majority of trauma insurance policies
Other conditions covered that you may wish to look for include:
- Diabetes and diabetes-related complications
- Fractures or broken bones that require surgical intervention, such as insertion of pins
- Major head trauma resulting from an accident, which is generally defined as a physical injury from an outside force as opposed to an illness
- Meningitis, Creutzfeldt-Jakob (mad cow) disease and other named illnesses
For certain conditions, trauma insurance will only out a partial benefit, such as the lower of either 25% or a specified sum. These conditions include:
- Benign tumours
- Loss of a single limb or eye
- Burns to less than a specified portion of the body, such as less than 20% of the body’s surface
- Loss of hearing in one ear of partial deafness
- The early stages of certain diseases like some cancers
- Minimally invasive surgeries
There are a range of benefits a trauma insurance policy will offer, but these features will vary between providers. It’s critical to understand that there are many included and optional benefits that are on offer when taking out a trauma insurance policy.
Here’s a list of the in-built benefits that are offered under critical illness cover.
|Feature||What does this cover?|
|Trauma benefit||This benefit provides you with cover for critical illnesses. Most policies will typically have two levels of cover:|
|Partial payment benefit||For certain conditions, trauma insurance will only pay partially or cap the benefit amount e.g. $25,000. Here’s a list of common conditions be covered under such a benefit:|
|Paralysis benefit||This allows your trauma benefit is normally doubled if you become paralysed, and suffer either diplegia, hemiplegia, quadriplegia, or paraplegia.|
|Funeral benefit||If you don’t have life insurance and you subsequently pass away, you can receive a funeral benefit up to $5,000 on some policies. In these cases, your trauma benefit will not be applicable.|
There are many options available with trauma insurance, and these will typically vary depending on your provider. Some extras you should look out for include:
|Extra option||What does this cover?|
|Premium waiver benefit||If you become disabled before age 70, then your premiums will be waived.|
|Accidental death benefit||An agreed benefit is paid if you die prior to age 75. Cover is generally available from $50,000 to $1,000,000 AUD.|
|TPD insurance||Here you’ll receive a lump sum payment if you’re assessed as being unable to perform at least two daily duties due to cognitive loss, or specific physical or mental disability.|
|Business future cover||A business owner can increase the sum insured annually in-line with changes to the company, or a key individual aligned to the operation, without a health assessment required.|
|Needlestick cover||A medical expert and staff like nurses, doctors and other health practitioners can receive lump sum payments if they contract HIV, Hepatitis A or C, while carrying out their normal occupation.|
|Insured child option||Children are covered for deaths, terminal illness and another 18 critical illnesses and injuries. Under the added feature, parents can receive a care benefit. This allows compensation to take time off work to care for a seriously injured or ill child. It also allows you to convert to a stand alone policy when your child turns 18.|
|Trauma reinstatement option||Trauma cover can be reinstated 12 months after receiving a claim for a trauma that is not related to the current claim.|
|Double trauma option (extended trauma)||Here your death cover is reinstated 14 days after you make a claim for a trauma or critical illness. Your premiums are waived until your policy expires.|
|Trauma top-up option (extended trauma)||This is only available for people with $100,000 AUD in trauma cover. Here your portion of trauma cover under the partial trauma benefit is increased to 25% of your insured trauma cover. It is capped at $200,000 AUD and $50,000 AUD for angioplasty procedures.|
|Accelerated buyback option||Your death cover is fully reinstated after 12 months after you receive compensation for a trauma.|
Bundling trauma insurance with other policies
It is common to package trauma insurance alongside life insurance, total and permanent disablement (TPD) insurance and income protection plans. You might also be able to combine health insurance and trauma insurance to get the most value.
- Can be more cost-effective than purchasing these policies separately
- You may be eligible for additional discounts if you choose to do this
- Certain providers might offer additional loyalty rewards or other benefits
- Having a single provider can make claiming benefits easier and more efficient
- If the insurer goes bankrupt you might lose all your cover because, in essence, you are putting all your eggs in one basket
- You may have fewer options when it comes to choosing which policy to claim a particular health event on. For example, the loss of a limb might make you eligible for both trauma insurance and disability, but you might only be able to claim one
Children and family cover
Many policies have the option of adding children or partners to the policy. This means you are also able to claim benefits for health issues which they suffer.
- This can be a valuable addition in the event of your child or partner suffering injury or illness
- It can be more cost-effective than purchasing separate policies for them
- Less expansive list of conditions covered for children or family members.
- There may be lower limits or additional exclusions when claiming benefits for children or partners
Extra benefits, or boosters
Certain policies may give you the option of paying extra for additional cover or a higher sum insured for particular events. For example, some policies might let you choose to raise your sum insured by another $100,000 in the event of cancer, or by an additional 50% for accidents. Other extras might be things like a ‘top up’ to replace benefits used and increase your total limits.
- This can be a valuable way of ensuring extra cover for particularly high-risk health issues
- This may be a good way of tailoring your policy and adjusting claimable benefits. The best trauma insurance policy* might be one that you have deliberately tailored to your needs
- Depending on the policy there can be many additional options, such as extended cover duration, reduced waiting periods, extra benefits for certain conditions and more
- This will typically incur additional costs
- You might not necessarily use the added benefits that you choose, and should weigh the added benefits to the additional expense
- The costs can rapidly add up and each benefit should generally be individually considered on its own merits
You are free to spend benefit payments at your discretion, but there are certain things that the payouts are intended to be spent on. These include:
- Refitting your home for disabled access, such as installing a wheelchair ramp if you have suffered mobility impairment
- Paying for ongoing medical expenses such as checkups and adjustments of medical devices
- Funding needs like a permanent caretaker or someone to help you with daily tasks
- Paying for ongoing rehabilitation costs such as physical therapy
- Purchasing required medication for management of conditions such as insulin for diabetes
Is trauma insurance tax-deductible in Australia?
No. Personal trauma insurance premiums paid are not tax-deductible in Australia.
More specifically, you cannot claim tax deductions for any premiums paid towards an insurance policy that compensates you for injury or illness. If you have bundled trauma insurance with income protection, then you may be able to claim tax deductions for the income protection insurance premiums only.
Are trauma insurance benefits taxable in Australia?
No. Trauma insurance benefits from privately held insurance policies are not taxable.
Can I get trauma insurance through superannuation?
No. As of 1 July 2014, you are not able to get trauma insurance through superannuation. Existing superannuation with trauma insurance that was acquired before this date remains active until it expires, lapses or you change super fund.
Exclusions are circumstances in which you cannot claim benefits. Even the best trauma insurance policy* will have a number of these, including an exclusion period. This is a period of time right after taking out, reinstating or upgrading a policy where you cannot claim benefits.
- This exclusion period is typically 90 days. You essentially have to wait 90 days for your trauma insurance to “activate”.
- Waiting periods after a benefit increase. After upgrading your policy or successfully applying for an increase in cover, there might be a 90-day waiting period before it takes effect. If you make a claim before this, you will only be eligible for your former, pre-upgrade benefits.
- The waiting period after reinstating your policy (after cancellation). If you freeze and unfreeze your policy then the waiting period will often be waived. Note: Some policies may also give you the option of reducing or waiving an exclusion period with certain offers or fees.
Click the see more exclusions and conditions
- Suicide and self-harm. Most policies will not pay out for any intentionally self-inflicted injuries such as those resulting from the survival of a suicide attempt.
- Multiple claims for one condition. Typically, you cannot claim benefits multiple times for the same condition. For example, if you have claimed partial benefits for an early-stage cancer diagnosis you may not be able to claim full benefits later if it progresses.
- Double dipping. You will usually be unable to claim benefits for any condition if you are already being paid compensation or benefits for that same condition from a different source. For example, if you are hit by a car and get paid medical benefits from the driver’s compulsory third party insurance, you cannot also claim trauma insurance benefits for the same accident.
- Claiming during a waiting period. A waiting period will almost always apply after taking out a policy, and you cannot claim benefits for injuries or illnesses that occur or were diagnosed during this period.
- High-risk jobs and lifestyle. Certain occupations or pastimes may exclude you from cover for particular conditions. For example, a forestry worker might not always be able to claim for limbs lost while on the job.
- Pre-existing conditions are often not covered. For example, if you have previously been diagnosed with diabetes then this will be a pre-existing condition and might not be a claimable event.
- Overseas incidents. Some policies might exclude injuries or illnesses that occur outside of Australia. The best trauma insurance policies* will typically cover you anywhere in the world, but this might not be necessary if you do not intend to travel outside of Australia. Travel insurance might be a good option for one-off trips.
- Criminal acts. Trauma and other insurance policies will typically never cover any injuries or illnesses sustained while being deliberately involved in a criminal act.
- Uncomplicated pregnancies. Many policies will not cover health issues sustained during an uncomplicated pregnancy. Cover for these more common issues may require certain health insurance pregnancy cover.
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking financial advice and consider your personal financial circumstances when comparing products.