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If you're suffering from a serious illness, or are recovering from a major injury, the last thing you want to be worrying about is money. Trauma insurance can make sure that doesn't happen.
That's because trauma insurance provides a one-off, lump-sum payment if you're diagnosed with a critical illness, or suffer a life-changing injury, so you don't have to fret about your finances.
It can be bought as a standalone policy, or as part of a wider life insurance package. We'll explain the differences in this guide, but both options provide similar cover.
You can spend the money however you like, whether that's to pay for medical bills, buy mobility equipment for your home, or even to cover the mortgage.
You probably noticed that our comparison table doesn't have the prices of each policy. Insurance quotes are based on a lot of individual factors making them all pretty personal. Hit the Get Quote button to get a tailored quote for your circumstances so you can start comparing!
Little tip before you begin: Trauma insurance is usually sold as an add on to life insurance but you can buy it as a standalone. Something to keep in mind when you're getting quotes.
Trauma insurance, sometimes called critical illness insurance, pays a lump sum payment if you ever experience a major medical condition, whether that's illness or injury.
Not all medical conditions are covered by trauma insurance but common inclusions are cancer, heart attacks and strokes. Common injuries include major burns, loss of a limb or loss of sight.
Most trauma insurance policies will also pay out if your independence is severely impacted, whatever the cause. So if you're unable to use the bathroom, cook for yourself or shower, it's likely you'll receive a lump-sum payment which will help you adjust to your new lifestyle.
The financial benefit 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 take a much-needed holiday once you're feeling up to it.
An adviser can help you find cover from trusted life insurance brands.
If you have trauma insurance, you pay a monthly or annual premium and, in exchange, you have a guarantee that you'll receive a lump-sum benefit if you experience a major medical condition.
The medical conditions covered may vary slightly between different insurers, but the specific conditions will be listed in your product disclosure statement (PDS). It's important to read this carefully before choosing which insurer you want to go with. If there's anything you're unsure of, call the insurance company directly to double check.
You can buy trauma insurance as a standalone product, or as part of a wider life insurance package, sometimes known as a bundle.
There is no "best" trauma insurance policy for everyone, because we each have specific needs and requirements. However, there are a few things to ask yourself when choosing a policy, as well as a few extra features to look out for.
| Feature | Questions to ask |
|---|---|
| Benefit amount | How much will the insurer pay you if you have to claim? |
| Coverage | How many illnesses and injuries does the policy cover? |
| Flexibility | Can you adjust your benefit amount if your circumstances change? |
| Waiting period | How long will you have to wait after you bought your policy, before you would be allowed to lodge a claim? |
| Indexation | Will the insurer lift your benefit amount in line with inflation? |
| Extras | Does your insurer offer helpful extras, like funeral cover or help with financial planning? |
| Support | Can you temporarily pause cover in times of financial hardship? |
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.
| Non-smoking Bundled with life | Non-smoking Trauma cost breakdown | Smoking Bundled with life | Smoking Trauma cost breakdown | |
|---|---|---|---|---|
| NobleOak | $25.19 | $14.31 | $53.23 | $32.63 |
| RAC | $24.48 | $6.74 | $53.22 | $12.77 |
| ANZ | $31.30 | $13.59 | $57.81 | $28.53 |
| TAL | $38.30 | $22.29 | $83.06 | $48.14 |
| Qantas | $46.50 | $26.48 | $100.87 | $57.19 |
| Allianz | $29.07 | $11.31 | $58.26 | $26.01 |
| Zurich | $16.88 | N/A | $29.97 | N/A |
| MLC | $24.68 | N/A | $57.21 | N/A |
| AIA | $31.11 | N/A | $54.03 | N/A |
| OnePath | $30.42 | N/A | $54.84 | N/A |
*The above quotes were generated using a 35-year-old male taking out $200,000 life insurance. In the case of bundled insurance, it came with $100,000 trauma insurance attached. The price quoted is on a monthly basis.
Still deciding whether trauma insurance is a good idea for you? Here are some of the advantages:
To find out if it's worth investing in something, you need to look at both the advantages and the disadvantages.
You can buy trauma insurance as a standalone policy, or bundled with your life insurance. The way you buy your trauma insurance may have an impact on any eventual payments.
The amount you claim from your trauma insurance is deducted from the overall amount you can claim from your life insurance. So if you have life insurance for $2 million, and claim $200,000 following a trauma event, you would only receive $1.8 million if you later had to claim from your life insurance.
If you have a standalone trauma insurance policy, and you have to make a claim, the policy will usually end. If you have other life insurance policies with the same insurer, but they are not bundled, those policies will be unaffected. You may be able to apply for another trauma insurance policy if you wish, but you are not guaranteed to be accepted.
Various cancers, heart conditions and strokes are generally covered by most trauma insurance policies. However, some insurers cover many more medical conditions, including:
Remember, specifics will vary between different insurance companies so always check your PDS to see which conditions are covered.
No. Any premiums for trauma insurance are not tax deductible. This means that you can't claim back tax on the premiums you pay for a trauma insurance policy. Put simply, insurance premiums aren't tax deductible when the policy pays a benefit for physical injury. This means that all forms of life insurance, except income protection insurance, are not tax deductible.
Of course, this is different from the tax-free lump-sum payment you receive when a claim is paid out. You'll generally never need to pay tax on any financial benefit if you do ever have to make a claim.
No. Trauma insurance in super hasn't been available since July 2014. However, if you were in a super fund that offered trauma insurance before this time, there's a chance you might have a policy. If you're not sure, give your super fund provider a call or check your member statement; this should tell you if you have trauma cover through your super.
Keep in mind that if you do have trauma insurance in super, the premiums will be coming out of your super, eating into your retirement fund, and in some cases, the payout won't be enough to cover all your medical bills and expenses. You can find out more information about life insurance through superannuation, and whether or not it's worth it, here.
Yes. While nobody wants to think about their kids getting sick or suffering a serious injury, unfortunately, it happens.
Taking out trauma insurance for your child could give you a financial safety net so you can take time off work to be with them if they get sick. It could also help you pay for better medical care and ongoing rehabilitation.
Not all insurance companies have the option to add child cover to your trauma insurance policy, but the following table shows some brands that do.
| Brand | Child cover amount | Entry age for children |
|---|---|---|
| Guardian | $20,000 - $50,000 | 2-17 |
| AMP | $10,000 - $200,000 | 3-16 |
| AIA | $200,000 | 2-15 |
| BT | $200,000 | 2-14 |
| Clearview | $10,000 - $200,000 | 2-18 |
| CommBank | $10,000 - $250,000 | 3-17 |
| Metlife | $50,000 | 1-16 |
| MLC | $10,000 - $200,000 | 3-18 |
| Onepath | $200,000 | 2-15 |
| Real | $20,000 - $50,000 | 2-17 |
| Westpac | $200,000 | 2-14 |
| Zurich | $10,000 - $500,000 | 2-17 |
| Virgin | $1,000 - $50,000 | Not stated |
Trauma insurance can be a financial lifeline when you need it most. The money you receive could go towards:
A serious medical condition can take a huge toll on your finances. Whether that's because you have to take time off work, pay for medical care, or even renovate your home to be more accessible.
Even if you do recover and are able to return to work, many people struggle to find employment again, or can't return to the same level of employment they held before their accident or illness.
When weighing up whether trauma insurance is worth it, ask yourself the following questions:
Hopefully, you'll never have to claim on your trauma insurance, but having a policy provides a financial safety net so you and your family have peace of mind.
We can't tell you how much trauma insurance you need, but we can help you figure it out. When deciding how much cover is right for you, always take these factors into consideration:
If you are diagnosed with a critical illness like coronary heart disease, cancer or stroke, it should be covered by your trauma insurance policy. You can make sure by checking the covered medical conditions in your PDS.
When you submit your claim, you'll need to provide evidence that you've met the definition outlined in the PDS. Get your doctor to provide or complete the claim forms that your insurer will issue you. They'll be able to outline important details regarding your diagnosis. Once you've got all the information you need, you can submit your claim. In most cases, you should receive a one off, tax-free lump-sum payment to your nominated bank account.
One other important detail worth knowing: some policies come with partial trauma benefits. This is when you only receive between 10% and 50% of the sum insured when the diagnosis is not considered as serious or life-threatening. For example, if your total sum insured was $500,000, a partial benefit of 10% would give you $50,000 for something that doesn't require major medical treatment, like early stage melanoma. In most circumstances, the remaining sum insured ($450,000) would be there for you if your condition worsened.
Total and permanent disability (TPD) insurance pays a benefit if you are totally and permanently disabled. Usually, you have to prove that you are either unlikely to work in your own occupation, or any occupation, ever again.
On the other hand, trauma insurance will pay a benefit, regardless of whether the medical condition permanently impacts your life or not. However, it only covers specific conditions.
Insurers usually have a list of critical illnesses that they cover. You can find this in their product disclosure statement (PDS). For your claim to be successful, you'll need to provide medical evidence from your doctor proving that you have been diagnosed with one of the covered medical conditions.
Some insurers are stricter about their definitions than others. 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.
Bottom line: read the PDS before you buy a policy. It's boring, but it's worth it in the long run.
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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.
All you need to know about critical illness insurance in Australia.
