What is Trauma Insurance?

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
  • Cancer
  • Stroke
  • Alzheimer’s disease
  • Blindness
  • Major head trauma

Do I need trauma insurance?

Advancements in the world of medicine now mean that being diagnosed with a serious illness e.g. cancer isn't always fatal. With surviving however comes with real costs that must be handled. Trauma insurance can offer cover in areas where life insurance, income protection and disability insurance fall short:

  • Unlike life insurance. Trauma insurance pays out if you survive a critical condition (as opposed to when you die)
  • Unlike disability insurance and income protection. Trauma insurance will pay out on diagnosis (as opposed to after you prove you are unable to work).

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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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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Compare trauma insurance from direct brands

Product details Maximum cover Maximum Entry Age Cooling-off
(days)
TAL Lifetime Protection Trauma Insurance
TAL Lifetime Protection Trauma Insurance
Get a trauma benefit up to $2 million with cover for up to 37 medical conditions. $500,000 59 30 Get quoteMore info
NobleOak Trauma Insurance
NobleOak Trauma Insurance
Get trauma insurance cover for 38 medical conditions including heart attack, stroke and coronary bypass surgery. $2,000,000 59 30 Get quoteMore info
Recover Well
Recover Well
Receive a lump sum payment up to $1,000,000 if diagnosed with a serious illness or injury. $1,000,000 59 21 Get quoteMore info

How can trauma insurance relieve financial stress?

Some of the 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 e.g. your health insurance may not cover the full cost of treatment.
  • 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.

Some other expenses trauma insurance can be used for

  • 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.

What conditions does trauma insurance cover?

Trauma insurance definition events can differ from brand to brand but most will cover you for the following events:

  • Alzheimer’s disease
  • Major burns
  • Blindness
  • Coma
  • Deafness
  • Dementia
  • Coronary by pass surgery
  • Encephalitis
  • Chronic liver disease
  • Major organ transplant
  • Paraplegia
  • Quadriplegia
  • Heart attack
  • Occupational acquired HIV
  • Chronic lung disease
  • Stroke
  • 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.

Payment is usually granted upon diagnoses of your condition. Check with your insurer for the correct process on how to make a claim.
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.

Do I really need trauma cover if I have health insurance?

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.

What's the difference between trauma insurance and other forms of cover

Details
Trauma Insurance
TPD Insurance
When am I covered?You are diagnosed with a serious illness e.g. cancerYou 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 madeYou'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 insuredUsually up to $5mUsually up to $10m
Is it available though super?No (not anymore)Yes
Form of paymentLump sumLump sum
DetailsTrauma InsuranceIncome 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
No
Yes
Form of payment
Lump sum payment
Regular payments (income protection)
DetailsTrauma CoverLife 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
Yes
Form of paymentLump sum
Lump sum


How much cover do I need?

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

Can I bundle life cover with trauma insurance?

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.


Why should I consider trauma insurance?

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.


Compare trauma insurance policies with an adviser

William Eve

Will is a personal finance writer for finder.com.au specialising in content on insurance. While he cannot give personal advice to clients, Will enjoys explaining the intricacies of different types of protective cover to help individuals and businesses find affordable cover that won't leave them underinsured.

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