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What is trauma insurance?

Trauma insurance protects you in the event of a life-changing illness or injury.

Trauma insurance (also known as critical illness insurance) provides a lump-sum payment if you suffer a serious medical condition, such as a heart attack or cancer. Unlike health insurance, you can use the payment from trauma insurance for anything – not just the initial cost of medical treatments.

Note: Most insurers will cover up to 50 different conditions.

Do I even need trauma insurance?

Advancements in medicine now mean that being diagnosed with a serious illness such as cancer isn't always fatal. However, surviving the illness comes with real costs. 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).

Trauma insurance can be bundled together with life insurance or purchased separately.

Is it worth my money?

Trauma insurance is one of the cover types you hope you never have to claim.

However, it's important to think about what would happen if you do pick up a life-changing condition. If you were diagnosed with cancer and had to quit your job, without knowing when or if you might be able to return to work, what would you do with your mortgage? Imagine paying for your dream house, only to get diagnosed with cancer. Then imagine beating cancer, only to be left without a roof over your head.

Five ways trauma cover can help out during a tough time

Trauma insurance offers a lump-sum payment (that in many cases is up to $2 million) if you develop a serious illness or injury. Here are some real-life examples of how critical illness cover is used:

Doctor speaking with patient

1. Ability to afford the best medical treatment

With trauma insurance, choosing the best medical treatment available becomes a legitimate option. You could use the lump sum you receive to fill in the gaps where your health insurance may not cover the full cost of treatment.

Female doctor nurse hospital health patient

2. Meet the long-term costs of a life-changing illness

The cost of surviving a critical condition such as a heart attack can be ongoing and is not typically covered by health insurance. You can use your benefit payment to alleviate any financial stress brought about by additional medical expenses, such as rehabilitation, carers and changes to the home.

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3. Take a holiday with your family

After being diagnosed, you'll probably want to spend as much time with your family as possible. Trauma insurance lets you spend quality time with your family without having to worry about the costs.

If the illness is untreatable or the chances of survival are slim, you can use the money to fund family holidays and dream experiences. While it may seem inconsequential, the holidays could let the family spend time together and create some memories. It also allows the family member suffering from the critical illness to enjoy a quality life during their final months.

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4. Take time off from work without any worry

When you have a critical illness, there is a good chance you will need to take some time off work or even stop working altogether to get extra care. Trauma insurance will allow you to get the assistance you need while you are receiving treatment. Both you and your spouse can take some time off from work without having to worry about having enough money.

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5. Achieve your financial goals

When tragedy strikes, you may not be able to generate the same income you were making before since you may no longer be able to work or your spouse may work less to take care of you. You can use your trauma insurance to pay off the following financial commitments:

  • You can pay for someone to take your place if you are the proprietor of your own small business.
  • You can pay out any credit card or other debts to give you more cash flow.
  • You can pay off your mortgage so that you know that no matter what happens in the future, your family will always have a roof over their heads.

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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)
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

Types of diseases and illnesses people claim on trauma insurance

Cancer is one of the most common serious illnesses, so unsurprisingly it makes up the bulk of trauma insurance claims.

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 bypass 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 cover for an event not listed in your insurance company’s list, you can ask for it to be included, but it will mean you have to pay a higher premium. The illnesses that trauma insurance covers 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 made upon the diagnosis of your condition. Check with your insurer for the correct process on how to make a claim.
A broken leg that is supposed to heal within six to eight weeks is not considered a trauma claim. In other policies, you can add this 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 help pay for your hospital bills and medical expenses. However, 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 and nursing care costs, leaving you to pay these expenses out of your own pocket. Trauma insurance is an additional layer of cover on top of your health insurance in the event that you suffer from a more serious medical condition. It will give you an extra financial buffer for any ongoing commitments that are not covered under your health insurance. You can 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 such as cancer. You are unable to work due to illness or injury.
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 through super?No (not anymore)Yes
Form of paymentLump sumLump sum
DetailsTrauma InsuranceIncome Protection
When am I covered?
You are diagnosed with a serious illness such as cancer.
You are unable to work due to illness or injury.
What's it for?
It helps you pay for immediate and ongoing medical costs as well as changes to your life style.
It provides you with a portion of your regular income to help you maintain your standard of living while 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
What's the purpose of cover?
Trauma insurance is essentially "living insurance". This means you are provided financial assistance in the event you are diagnosed with a life-threatening disease.
Life insurance 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 your preferences. As a general rule of thumb, you should consider the following:

  • Your current debts, such as your mortgage or other loans
  • Every-day living costs
  • Potential medical expenses in the event 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 and terminal or critical illness, but you also get to save on fees since purchasing a standalone trauma cover policy can be more costly. There are other benefits as well, 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 critical illness that is listed on your policy. You can use the benefit in any way you deem necessary. While most may argue that life expectancy is rising and health is improving due to the advancement of medical science, statistics have shown that the number of people who are afflicted with cancer, heart disease and even stroke is increasing. With the number of such cases rising, so is the possibility of experiencing trauma. Moreover, with a lot of breakthrough medicines and discoveries, it is possible for you to fully recover. However, it is important to remember that having a 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 is taken care of until you get 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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