Trauma Insurance FAQ

What is Trauma insurance?

• Insurers will pay you a lump sum if you are diagnosed with a specified life-threatening illness or injury. Some policies will cover you for a range of traumatic circumstances or just single or specific ones like cancer and heart disease.

How much does it cost?

• The cost of this insurance will depend on: your age, gender, health and whether you smoke. It may also take into account your family background and medical history.

Is Trauma Insurance tax deductible?

• No, Trauma insurance is not tax deductible.

Trauma or Critical Illness Insurance

When there is something wrong with your health, every aspect of your life is affected and this not only puts an emotional strain on you, but also causes financial strain when you are unable to complete your normal work duties.

You can take out trauma cover insurance if you are between 17 and 59 and your policy can continue to be renewed until your 80th birthday, where coverage adjusts to Loss of Independent Existence cover after 70 years old. Trauma cover insurance can pay you a lump sum benefit if you survive 14 days after an eligible major medical condition, and for comprehensive cover you can apply for trauma insurance with your life insurance, or as a separate policy.

What Does Trauma Insurance Mean

Trauma cover insurance is such a broad term and the types of coverage in Australia have increased since it began. Trauma cover insurance can pay a lump sum if you are diagnosed with a condition, for example some forms of cancer or if you have a stroke or a heart attack or you suffer major head injuries.

After a successful claim has been lodged, your trauma cover insurance can pay a lump sum amount which will help you meet your everyday bills and expenses as well as cover any treatment or medication costs. Trauma cover will pay out a benefit based on the diagnosis of an eligible disease or condition, so unlike income protection insurance benefits, you don’t have to be deemed unable to work, and you can continue to work if you choose.

Trauma insurance is also paid as a lump sum amount, rather than in regular intervals to mimic your income stream so that you are able to budget and distribute the funds as you need to, whether to pay your mortgage or medical bills, finally indulge in a new car, or take an overseas holiday to recuperate.

How To Compare Trauma Insurance

• What you require in your trauma insurance policy. Some basic policies may only cover up to 10 medicla conditions with more advanced policies offering a further 7 medical conditions. It is essential you know exactly what is being covered.
• Find a policy that can be tailored to suit your needs. Cheaper polices may have more restrictions on what the buyer can adjust in terms of how they want to pay their premiums.
• Compare the benefits on offer from each plan. Buyers should be aware of what each provider is offering in terms of special rebates or promotional offers.
• Compare premiums from each provider and know exactly what the policy is covering.

What is Covered by Critical Illness Insurance

Trauma cover can also be known as critical illness insurance and each policy will have different stipulations on which illnesses and traumatic incidents are covered, and to what extent. Common traumas included are heart attack, heart disease, stroke, malignant cancer, chronic kidney failure and organ transplants.

Most trauma cover insurance policies do not include benefits for trauma as a result of an accident, as the main aim of trauma cover is to provide financial breathing space to give you a real chance to recover from your illness or operation. For example, if you have just had major heart surgery and need six months to recover from the operation properly, you will be able to recover at your own pace, knowing there is no rush to return to work because your bills will all be paid and you can go on living. Financial difficulties are one of the leading causes of stress and if your health has already suffered a blow, you will recover faster without the stress of your financial obligations beating down your door.

When comparing trauma cover insurance policies, consider which illnesses and diseases are included, and to what extent, so you can decide on the cover which is best suited to you, your lifestyle, your line of work and your family history. Illnesses and diseases which can be included with trauma cover insurance include:

• Alzheimers Disease
• Aortic Surgery
• Aplastic Anaemia
• Benign Brain Tumour
• Blindness
• Severe Burns
• Cancer
• Cardiomyopathy
• Coma
• Coronary Artery Aniography
• Coronary Bypass Surgery
• Deafness
• Dementia
• Diplegia
• Encephalitis
• Hemiplegia
• Heart Attack
• H.I.V Accidental Infection
• H.I.V Occupational Acquired
• Kidney Failure Chronic
• Loss of Limbs or Eye
• Loss of Speech
• Loss of Independent Existence
• Lung Disease
• Major Head Trauma
• Major Organ Transplant
• Motor Neurone Disease
• Multiple Sclerosis
• Out of Hospital Cardiac Arrest
• Parkinsons Disease
• Peripheral Neuropathy
• Pulmonary Hypertension
• Quadriplegia
• Stroke
• Terminal Illness

Your trauma cover insurance may also include a death benefit, where a lump sum is paid to your beneficiaries in the event of your death, as well as total and permanent disability insurance where you receive a lump sum if you become sick or injured and are unable to work to your normal capacity.

What are the Benefits of Trauma Cover Insurance

While term life insurance can look after your family if you die and are no long able to provide for them, a life insurance policy is not much use if you are still alive, but unable to provide for your family. That is where trauma cover can fill the gap in your personal insurance plans because trauma cover pays out a benefit based on the diagnosis of an illness or disease. For example, if you suffer a mild heart attack and return to work after two months rest, will you be as productive and will you be able to handle the same work pressures and earn the same income?

If the answer is no, an income protection or TPD insurance policy will require you to be assessed on the effects of the trauma on your productivity, so you are not receiving a benefit until after you need it – when you are already back at work and under the same stress which lead to the heart attack. However, trauma cover insurance pays you a cash lump sum amount at the time you contract an eligible disease or suffer a specific trauma. The range of trauma covered by each policy will depend on the premiums you pay and the quality of the insurer but in most cases you can also be covered for accidental trauma, without having to complete waiting periods, which can be up to 90 days.

Trauma cover insurance can be of benefit to you in a stressful time when your health is on the line, because the cash benefits make it possible for you to pay for specialist medical attention and even travel internationally to get the best service. Your benefits can even help with obtaining private medical care to avoid waiting lists. Trauma cover can also pay for modifications you need to make to your home, while removing the financial stress usually associated with illnesses and forced time away from work.

You can also use your trauma cover payout to repay debts for greater financial freedom while you recover, or to maintain financial independence if you are single and have no other support income. Even if you do not undertake paid work, trauma cover can mean you are able to hire a nanny or a housekeeper to perform home duties so you can rest and recover.  

Trauma insurance is very different to income protection insurance, but can be a good alternative cover if you are not in paid work. The premiums payable on trauma cover are also often lower for women than for men because women statistically suffer less from critical illnesses like heart attacks. Therefore, while income protection can be on par for both men and women, if you are a homemaker, trauma cover can be a good investment as it can allow you to get the extra care you need to recover in case of illness, allow you to clear your medical bills and your other debts and leave you free to recover stress free and at your own pace.