No. Trauma insurance pays you out on the diagnosis of a condition (if covered by your policy). Total and permanent disability insurance on the other hand, pays out when you meet the insurers definition of a disability.
The two most common types of trauma insurance claims that people make are related to cancer, heart attacks and heart diseases.
|Heart attacks and diseases|
Although most trauma insurance claims are for cancer, heart disease and stroke
, some Australian insurance providers offer cover for as many as 50 conditions. The range of conditions covered by trauma insurance varies between providers. Therefore, it is important to check with your insurer what events are covered.
Standard conditions covered
- Automatically included conditions. Depending on the policy, conditions that are usually covered automatically include:
- Alzheimers Disease
- Aortic Surgery
- Aplastic Anaemia
- Benign Brain Tumour
- Severe Burns
- Coronary Artery Angiography
- Coronary Bypass Surgery
- Heart Attack
- H.I.V Accidental Infection
- H.I.V Occupational Acquired
- Kidney Failure Chronic
- Loss of Limbs or Eye
- Loss of Speech
- Loss of Independent Existence
- Lung Disease
- Major Head Trauma
- Major Organ Transplant
- Motor Neurone Disease
- Multiple Sclerosis
- Out of Hospital Cardiac Arrest
- Parkinson's Disease
- Peripheral Neuropathy
- Pulmonary Hypertension
- Terminal Illness
Extra conditions for an added cost
- Additional conditions. Types of conditions that you can also get covered for an extra premium:
- Advanced Endometriosis
- Carcinoma in Situ of the Breast
- Deafness in one ear
- Diabetes complications
- Early Stage Leukaemia
- Early Stage Prostate Cancer
- Hydatiform mole
- Partial loss of hearing
- Pregnancy complications
- Severe Osteoporosis
Note: Some conditions are only covered partially e.g. 50% of your sum insured.
How can trauma insurance help during a tough time?
Trauma insurance provides a payment in a traumatic event. This payment can be used however you like. Some situations you may use payment for include:
Immediate costs of medical trauma
This benefit payment can be used to cover medical bills and also pay for alterations that need to be made to the policyholders home because of the injury such as a wheelchair ramp.
Time off work
When you are trying to recover from or deal with a medical trauma, the last thing you want to be worrying about is work. That is why you can use your benefit amount to take some time off work, and allow your partner to take some time off too, so that you can concentrate on your recovery.
Coverage for debts and rehabilitation
Unlike income protection insurance, trauma protection is not designed to be ongoing financial support, trauma insurance is designed to help cover short term medical bills and the cost of your rehabilitation, as well as paying off your debts so that you don't have to worry about a mortgage or losing your home while you recover.
How trauma insurance different other forms of cover?
Trauma Insurance vs Income Protection
|Trauma Insurance||Income Protection|
|Provides a lump sum payment if the insured suffers an event specified in the policy.||Income protection provides ongoing monthly benefits if the insured is unable to work due to an illness or injury.|
|Provides immediate financial relief in the event of a medical trauma, so that you and your family are able to keep up with medical expenses, rehabilitation costs and pay off debts.||Provides a replacement income when you need to take time off work to recover from an illness or injury and keep up with daily living expenses.|
Trauma Cover vs Life Insurance
|Trauma Cover||Life Insurance|
|Is a living insurance. It ensures your family receives a lump sum payment if you have been diagnosed with a life-threatening disease, once the survival period expires.||Life Insurance provides coverage in the event of your death or diagnosed with a terminal illness with less than 12 months to live. A lump sum amount is be payable to your nominated beneficiaries.|
Trauma cover can be a standalone policy or linked with the policyholders life cover. Applicants can usually receive cover until the age of 65 though some companies provide cover to the age of 80 with some restrictions.
You can apply for cover in Australia if you are:
- Between the age 17 to 59 years old
- An Australian citizen or permanent resident
- Residing in Australia at the time of application
If I've already suffered a serious illness can I apply for trauma cover?
Unfortunately it is difficult to get cover for a pre-existing medical conditions. However, you can still get covered for most other un-related conditions with an exclusion on the specific condition you have previously been diagnosed with.
Example: if you're condition in the past was a heart attack, this how some insurers might cover you:
- Kidney failure
- Lung disease
- Medically acquired HIV
- Heart attack
- Open heart surgery
Are Trauma Insurance Premiums Tax Deductible?
For individual policyholders such as employees or self-employed workers, premiums for trauma insurance can not be claimed as a tax deduction. Any benefits received are not treated as income. This is the case because the benefit is not providing a replacement of income, as is the case with income protection insurance, but a capital amount.
Are Benefit Payments Under Trauma Insurance Free From Capital Gains Tax?
If the person who received the benefit payment is either the policy owner or a defined relative, capital gains tax exemption applies.
What features should I compare on Australian policies?
Look out for the following policy information:
|Policy information||What does this mean?|
|Entry ages||Ages where you are able to buy a policy e.g. 18-65|
|Expiry age||Age when your policy will no longer be valid and you will no longer be able to make claims. e.g 99 years of age|
|Maximum sum insured||Maximum amount that can be paid out in a claim e.g $10 million|
|Type of premium structure||This is the way you pay for your policy each year. Premiumns can be levelled (same premium each year), stepped (rises each year but starts lower) or a hybrid (combinaiton of both).|
|Life cover bundle||Trauma cover that's combined with life cover|
Make sure you also consider your personal circumstance:
Look out for:
- What you require in your policy. Some basic policies may only cover up to 10 medical conditions with more advanced policies offering cover for up to 30 medical conditions. It is essential you know exactly what is being covered before applying.
- Find a policy that can be tailored to suit your needs. Cheaper policies may have more restrictions on what the buyer can adjust in terms of how they want to pay their premiums.
- Compare the benefits on offer from each plan. Buyers should be aware of what each provider is offering in terms of special rebates or promotional offers.
- Compare premiums from each provider. Make sure you know exactly what the policy is covering.
What additional trauma options can provide extra value for me?
|Additional policy features||What does this do for me?|
- Trauma Buy-Back (Double trauma)
|If the trauma insurance is linked to a life insurance policy, Buy Back option enables the policyholder to repurchase a level of term life insurance cover following a claim for critical illness. This "top-up" ensures there is a sufficient level of life cover in place following a claim payment.|
- Protection for Homemakers
|Trauma protection provides valuable coverage for homemakers - who do not get paid for what the work that they do. With trauma cover, you are able to hire a nanny or housekeeper to perform house duties, while you rest and recover.|
- Financial Planning Benefit
|Insurance company provides a benefit to reimburse the cost of financial planning advice after a successful claim.|
- Guaranteed Future Insurability Benefit
|Policyholder is able to increase the cover amount every policy anniversary without having to go through any further medical underwriting.|
|Benefit provided to reimburse accommodation expenses for an immediate family member if the insured is bedridden and away from their home.|
|Lump sum benefit paid to assist policyholders support their child if they suffer a serious illness.|
|Premium waived if insured becomes totally disabled.|
Comparison: Does the most expensive trauma insurance policy offer the most features?
Not necessarily. As shown in the comparison below, the type of features offered aren’t always related to the price. Some features are offered on the cheaper policy but not by the more expensive policy.
|Feature||Cheapest policy ($21.24 per month)||Most expensive policy ($35.79 per month)|
|Amount of trauma insurance cover||$150,000||$150,000|
|Death benefit||$10,000|| |
|Complimentary insurance for children||No||No|
|Buy back option after trauma claim||No||No|
Prices and features were taken from finder life insurance quote engine using a $150,000 stand alone trauma insurance policy for a 29 year old male non-smoker. Details were last checked as accurate in January 2018.
Is the cheaper product better?
Not always. Although a few features stand out, it’s good idea to look beyond the feature set. A good place to start is to look at the customer satisfaction and brand awards of the insurer. Additionally, when comparing features it's a good a idea to access what features are important to you.
Find out what features are important to you by speaking to an adviser
Who should consider taking out trauma insurance?
Trauma Insurance is really worth considering for anyone that does not have the financial backing to deal with the costs that may be associated with suffering a Trauma condition. This may include:
- People with dependent families.
- People that do not want to burden friends and loved ones with the expense of a serious illness or injury.
- Executives and other key workers in a company that work under a high-degree of stress.
- Older people that may be more susceptible to suffering a condition.
- Young couples that had only recently married and are looking to protect their families future.
- People that already have life cover or income protection but would like to accommodate for the extra risk of a trauma condition.
- People that may have been unable to take out income protection due to the nature of their occupation or preexisting health conditions.
How much will trauma insurance cost me?
The cost of your policy depends on a number of variables specific to your situation, such as:
- Standard vs plus policy. A plus policy will cover more conditions but will also cost you more
- Your age. Premiums get more expensive as you get older and your risk of injury or illness increases.
- Your gender. Women in their mid 30s generally pay higher premiums then men of the same age as they have a higher chance of being diagnosed with cancer, particularly breast cancer. Men in their mid-50s men generally pay higher as are prone to cardiovascular disease.
- Your smoking status. As a smoker, or someone who has recently quit smoking in the last 12 months, your risk of illness and medical trauma are greater than a non smoker.
- Your benefit amount. The higher the benefit you opt for when taking out trauma insurance, the higher your premiums.
- Your family background and medical history. Family medical history and any pre-existing medical conditions will help the underwriter determine the level of risk that you carry.
- The insurance brand. Each insurance brand will usually have a different cost on policies with the same sum insured.
Sample cost of trauma insurance policies
The following table shows how the cost of your premium is affected by your sum insured and the brand you go with:
|Policy||Cost per month|
|AMP Flexible Lifetime Protection||$22.23|
|BT Protection Plans||$23.97|
|TAL Accelerated Protection||$24.07|
|AMP Priority Protection||$24.55|
|Asteron Life Complete||$27.72|
|Zurich Wealth Protection||$31.05|
|Policy||Cost per month|
|AMP Flexible Lifetime Protection||$35.67|
|BT Protection Plans||$39.46|
|TAL Accelerated Protection||$40.78|
|AIA Priority Protection||$41.52|
|Zurich Wealth Protection||$47.11|
|Asteron Life Complete||$47.36|
|Policy||Cost per month|
|AMP Flexible Lifetime Protection||$49.12|
|BT Protection Plans||$50.30|
|TAL Accelerated Protection||$54.99|
|AIA Priority Protection||$56.88|
|Zurich Wealth Protection||$60.68|
|Asteron Life Complete||$64.06|
|Policy||Cost per month|
|AMP Flexible Lifetime Protection||$62.56|
|BT Protection Plans||$64.23|
|TAL Accelerated Protection||$70.87|
|AIA Priority Protection||$73.31|
|Zurich Wealth Protection||$76.51|
|Asteron Life Complete||$82.71|
|Policy||Cost per month|
|AMP Flexible Lifetime Protection||$72.81|
|BT Protection Plans||$74.30|
|TAL Accelerated Protection||$82.57|
|AIA Priority Protection||$87.97|
|Zurich Wealth Protection||$89.40|
|Asteron Life Complete||$96.47|
Do claims get paid out for trauma insurance?
A study over two years indicates a small decrease in the number of successful accident and sickness claims:
|Year||Accepted claims (%)|
|Difference (%) ||-3.86%|
Source: General Insurance Data Report 2014-2015, Code Governance Committee.
Tips for ensuring a successful trauma insurance claim
- Pre-existing medical conditions. While some policies can cover a pre-existing medical condition with limited cover, most policies won't. Don't assume you are covered straight away.
- Check the list of covered conditions. Trauma insurance will only pay out for medical events listed in the product disclosure statement (PDS).
- Disclose everything. If you have any previous medical history or if you work in a dangerous occupation, then you must disclose this with your insurer. Failure to disclose (even with conditions unrelated to your claim) could lead to an unsuccessful claim in some cases.
If I make a claim for trauma will I still have death cover?
If you take out a life insurance policy that includes trauma cover and make a trauma claim your policy will typically subtract the trauma benefit amount from your total death benefit. For instance if you have $1 million is life insurance with a $300,000 trauma benefit and make a claim you'll be left with $700,000 death cover.
Can I make sure I still have full life insurance cover after a claim?
Yes! the good news is that you can take out a buy-back option (double trauma) that allows you to reinstate your full life cover. Here's how it works:
|Life Insurance||Trauma cover|
|Sum insured (before claiming)||$1,000,000||$400,000|
|Amount paid out on a trauma claim||-$400,000||-$400,000|
|Left over cover after trauma claim||$600,000||$0|
|Cover reinstated from double trauma option||+$400,000||+$0|
|Final cover after double trauma||= $1,000,000||= $0|
There are so many different forms of life insurance available, so below are some simple answers to questions which might be weighing on your decisions:
As with most types of life cover, Trauma Insurance will not provide coverage for intentional self-inflicted injury or attempted suicide.
Trauma insurance will usually not cover pre-existing medical conditions. However you can still get covered for events not related to a pre-existing medical condition. Note: You should always disclose anything prior conditions with your insurer.
Most policies won't cover you straight away for certain types of medical conditions. This is known as the exclusion period and go up to 90 days.
Picture:James Keuning licensed under Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (image cropped)
Picture:Yo Szczepanska licensed under Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (image cropped)
*The number of conditions covered will vary policy to policy. Always check the product disclosure statement to review what is and isn't covered.