Find out what trauma insurance is and the critical situations it covers.
Trauma insurance (also known as critical illness insurance) is a form cover that provides lump sum payment in the event you suffer a serious medical condition. Serious medical conditions are defined by each brand differently and most insurers will cover up to 50 different conditions. Most policies will include some form of cover for:
- Heart attack
- Alzheimer’s disease
- Major head trauma
Do I need trauma insurance?
This comes down to preference and the type of cover you are after. Unlike life insurance, Trauma insurance pays our on a survival (as opposed to when you pass away) and unlike disability insurance, trauma insurance will pay out on diagnosis (as opposed to when you prove you are unable to work). This makes trauma insurance a more expensive form of cover but can offer cover in areas where income protection and disability insurance fall short.
Does trauma insurance come with my life insurance?
Trauma insurance can be bundled together with life insurance or purchased separately.
Video guide: Trauma insurance in 2 minutes
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Still unsure about trauma insurance?
Trauma insurance definition events can differ from brand to brand but most will cover you for the following events:
- Alzheimer’s disease
- Major burns
- Coronary by pass surgery
- Chronic liver disease
- Major organ transplant
- Heart attack
- Occupational acquired HIV
- Chronic lung disease
- Motor neurone disease
- Parkinson’s disease
- Heart valve surgery
- Chronic kidney failure
- Loss of limbs or eye
- Major head trauma
- Multiple sclerosis
If you want to have yourself covered for an event not listed in the insurance company’s list you can ask for it to be included but it will mean you having to pay a higher premium.
The types of illnesses or sicknesses trauma insurance cover may vary from provider to provider. However, most of the main conditions are similar, such as heart problems, cancer, and stroke. Other medical conditions may include quadriplegia, loss of limbs, and head trauma. Moreover, insurance providers usually cover 30 to 50 types of traumatic events.
When will I be paid?
Payment is usually granted upon diagnoses of your condition. Check with your insurer for the correct process on how to make a claim.
Beware of the exclusions on your policy
A broken leg which is supposed to heal within 6 to 8 weeks is also not considered a trauma claim. In other policies, it can be added as a separate add on. It is important to understand what your insurance policy covers as not all trauma policies are alike.
Your Medicare and private health insurance can provide some relief in meeting some hospital bills and medical expenses. However, remember that your health insurance will not cover any loss of income, especially when you are unable to work for an extended period of time. It also will not cover any expenses incurred that are outside the capacity of your health cover, such as rehabilitation, equipment, vehicle or home modification, nursing care costs. Thus, leaving you to afford these expenses out of your own pocket.
Trauma insurance can be treated as the additional layer of cover on top your health insurance in the event that you suffer from a more serious medical condition, in which you may require extra financial buffer for any ongoing commitments that are not covered under your health insurance. You read finder's full guide on the differences between trauma and health cover for a wider understanding.
|When am I covered?||You are diagnosed with a serious illness e.g. cancer||You suffer an illness or injury that results in you unlikely to be able to perform work again|
|What needs to happen before a payout is made||You'll need to survive a traumatic event as defined by the policy.||You'll need to prove your inability to ever return to work, either in your own occupation or any occupation.|
|Maximum sum insured||Usually up to $5m||Usually up to $10m|
|Is it available though super?||No (not anymore)||Yes|
|Form of payment||Lump sum||Lump sum|
|Details||Trauma Insurance||Income Protection|
When am I covered?
|You are diagnosed with a serious illness e.g. cancer.|
If you are left unable to work due to illness or injury.
What's it for?
Help you cover immediate and ongoing medical costs as well as changes to your life style.
Provides you with a portion of your regular income to help you maintain your standard of living whilst you are unable to work.
|Is it available through super|
|Form of payment|
Lump sum payment
Regular payments (income protection)
|Details||Trauma Cover||Life Insurance|
|Whats' the purpose of cover?|
Trauma insurance is essentially 'living insurance'. This means you are provided financial assistance in the event where you are diagnosed with a life-threatening disease.
Life insurance on the other is a form of death cover. This provides your family with financial assistance if you die during the term of the policy.
|Is it available through super?||No|
|Form of payment||Lump sum|
Having trauma insurance, then entitles you to a number of benefits which you may not have access without it. Perhaps, the most important benefits that trauma insurance can give to the insured and their families is their power to choose, which can be difficult in a time where the illness could incur extra expenses.
Other benefits of trauma insurance cover that you can take advantage of include:
- Ability to afford the best medical treatment anywhere in the world: With trauma insurance, you have the choice to access the best medical treatment and services that money can buy.
- Meet any additional and ongoing costs of treatments: You can use trauma insurance benefit payment to alleviate financial stress brought about by additional medical and rehabilitation expenses due to the illness.
- A chance to take a holiday with your family/to recover: Trauma insurance gives you the choice to spend quality time with your family without having to worry about the costs. In some cases where the illness is considered untreatable or the chances of survival are slim, the money can be used to fund family holidays and dream experiences. While it may seem inconsequential at first look, the holidays would give the family time to spend time together and create good memories. It also allows the family member suffering from that critical illness to have the quality life during his final months.
- Take time-off from work without any worry: Your spouse can take some time off from work without having to worry about the income. When you have been stricken with critical illness, there is a big probability where you need to get extra care. Trauma insurance will allow you to get the assistance you need in managing your household while you are under rehabilitation.
To receive the benefits from a trauma insurance cover you must survive at least 14 days after being diagnosed, or having the incident before you are allowed to put in a claim and have it successfully paid. Insured people have, as a result, been able to put the financial stress that would otherwise take place at such a time, out of their minds, knowing that their family's money matters are taken care of, so that your health, at that moment, is their top priority. Your trauma insurance cover could be utilised to pay for such things as the following:
- Extra money to cover any extraneous hospital or medical bills.
- Pay for someone to take your place if you are the proprietor of your own small business.
- Pay out any credit card or other debts to give you more cash flow.
- Pay off your mortgage so that you know that no matter what happens in the future to yourself your family will always have a roof over their heads.
Although the true trauma insurance definition is interpreted differently by life insurance companies for various events that may affect you on some occasions, it can mainly be used to describe an incident that is emotionally distressing and painful. An event of such proportion that it prevents you from being able to cope with your day to day life in an effective manner. It has been said that trauma is an event outside of a person’s control. This can be said to be true in one sense but it can also be ruled out in another, because you will always have the opportunity to insure yourself against such a happening, putting you back in control. This means that at least your financial affairs won't be effected and you will be able to cope with day to day matters that much easier.
This will depend on both your personal situation and preferences. As a general rule of thumb, you should consider:
- Your current debts e.g. mortgage
- Every day living costs
- Potential medical expenses in the even of a serious medical condition
- The on going costs of a serious medical condition
If you have an existing life cover policy, you have the option to link your cover with a trauma insurance rider. Not only will you be covered for death, terminal and critical illness, but you also get to save on fees, as purchasing a standalone trauma cover policy can be more costly. There are other benefits including the convenience of having one provider for multiple policies.
As previously mentioned, the main purpose of trauma insurance is to provide financial support in the form of a lump sum payment when you are diagnosed with a type of critical illness as listed on your policy. The benefit paid can be used in any way you deem necessary.
While most may argue that the life expectancy is rising and health is improving due to the advancement of medical science, statistics have shown that there is still an increase in the number of people who are afflicted by different types of cancer, heart diseases, and even stroke. With the quantity of such cases rising, so is the possibility of experiencing trauma in one point of your life.
Moreover, with a lot of breakthrough medicines and discoveries, it is possible for you to recover into full health. However, it is important to remember that having critical illness is no walk in the park and more often than not, the significant costs can take a toll on your finances. This is where trauma insurance can step in and provide the assistance that you require when the going gets tough and to ensure your family are still taken care of until you return back on your own two feet.