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Trauma insurance, sometimes called critical illness insurance, pays you a lump sum if you're diagnosed with a major medical condition. It's often available as an add-on when you take out life insurance.
The payout is tax-free and you can spend it however you like. You might want to use it to cover your medical bills, hire a care assistant or make your home accessible. Alternatively, you could use it to pay off the mortgage or other debts.
Insurers usually have a list of critical illnesses and injuries that they cover. You can find this in their product disclosure statement (PDS). These can include:
For example, cancer, heart attacks and strokes, but not mental illnesses.
For example, major burns, loss of a limb or loss of sight.
For your claim to be successful, you'll need to provide medical evidence from your doctor proving that your condition meets the insurer's definition. For example, if you were to suffer a major head trauma, there would need to be permanent neurological damage. Similarly, some insurers won't cover early stage cancers.
Various factors influence the cost of trauma insurance, including your line of work, smoking habits and chosen financial benefit.
To give you an idea of how much trauma insurance might cost you, we requested quotes from a range of major life insurers. Not many insurers offer trauma insurance by itself, so we requested quotes for a life insurance policy including trauma insurance and provided the breakdown price where possible.
| Policy | Male | Female |
|---|---|---|
| Average | $36.49 | $32.91 |
| AHM Life Insurance | $27.12 | $23.02 |
| Medibank Life Insurance | $28.54 | $24.22 |
| NobleOak Premium Life Direct | $30.62 | $28.33 |
| AAMI Life Insurance | $31.03 | $28.54 |
| Insuranceline Life Insurance | $31.03 | $28.54 |
| Allianz Life Plan | $35.96 | $36.17 |
| RAC My Protection Plan | $37.96 | $35.12 |
| Bendigo Bank MaxLife Life Protect | $69.66 | $59.30 |
| Policy | Male | Female |
|---|---|---|
| Average | $68.15 | $51.10 |
| AHM Life Insurance | $46.98 | $31.86 |
| Medibank Life Insurance | $49.46 | $33.52 |
| AAMI Life Insurance | $58.29 | $39.44 |
| Insuranceline Life Insurance | $58.29 | $39.44 |
| NobleOak Premium Life Direct | $63.54 | $50.09 |
| Allianz Life Plan | $72.39 | $57.52 |
| RAC My Protection Plan | $78.76 | $62.09 |
| Bendigo Bank MaxLife Life Protect | $117.46 | $94.80 |
*The above quotes were generated for a 35-year-old living in NSW, taking out $300,000 life insurance with a $100,000 trauma insurance cover. The prices quoted are on a monthly basis and were generated in March 2022.
We've broken down the advantages and disadvantages of trauma insurance to help you figure out if it's worth it for you:
A rundown of the tricky definitions for life insurance. Plus, what to look for when you're comparing.
An adviser can help you find cover from trusted life insurance brands.
All you need to know about critical illness insurance, which pays out a lump sum that's often tax-free.
Find out about standalone and bundled life insurance.
Everything you need to know about the cost of trauma insurance.
Trauma insurance pays out for specific health events, such as cancer, heart attack and many more. The costs of these events can vary widely, which makes it hard to find a sum insured that will suit every circumstance.
