Also known as critical illness insurance, trauma insurance provides a lump-sum payment if you suffer a serious medical condition.
Trauma insurance covers for you serious illnesses, accidents or medical conditions. If you take out a policy and then develop an illness or condition that's covered under the policy you will receive a one-off payment that can be used to cover your medical costs, large debts such as a mortgage, and the cost of home modifications and professional care.
To be eligible for a trauma insurance payout, your illness or injury must be one that is covered by your policy and while such conditions vary with insurers, the most common are cancer, heart attack, coronary bypass and stroke. The condition must also occur after what's known as the exclusion period.
You pay the same price as buying directly from the life insurer.
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Trauma insurance can be purchased as a standalone product or as part of a plan, often bundled with life insurance and TPD insurance. There are advantages and disadvantages to both options.
If your bundled trauma insurance policy doesn't provide sufficient cover you might need to consider additional cover options such as Buy Back and Double Trauma benefit to ensure you have adequate trauma protection.
Most claims for a critical illness or injury are for either heart attacks, strokes or cancer, but there are others that may vary between insurers. This is why it's essential you compare your cover, or speak to an adviser about a policy suitable to your needs.
You have two types of policies to choose between when signing up for trauma insurance: a standard policy or comprehensive policy. Most insurers cover the same medical conditions but there is a chance it will vary due to different definitions.
Here's a list of what is usually offered under standard and comprehensive policies.
| Standard policy | Comprehensive policy |
|---|---|
The cheapest type of policy. It typically covers between 30–44 critical conditions, including the following.
| Offers similar cover to a standard policy, but also provides cover for another 15 conditions. Here are some of them.
|
One step you can take to find out what medical conditions are covered by your policy is reading your Product Disclosure Statement (PDS). This is the outline of your contract, and includes all included costs, benefits and exclusions. All insurers provide a PDS when you sign up for a policy.
To make a trauma insurance claim you'll generally need to follow this process.
The survival period is the amount of time a policyholder must survive before passing away, in order to receive a trauma insurance payment. Imagine, for example, a trauma insurance policy with a 14-day survival period. If the policyholder suffers serious trauma, is taken to hospital, and dies 12 days later the insurer will not pay out the policy. But if the policyholder passes away after the 14-day survival period (as a result of their injuries or illness) the insurer will grant the payout.
*This diagram is purely for illustrative purposes and is not indicative of all cases and policies.
Most policies also feature a 90-day exclusion period. This is standard to make sure you don't just take out trauma cover to make a claim for a condition you know you already have.
Under this exclusion, claims for many insured events will not be paid if the condition occurs or is diagnosed within 90 days of:
Great, trauma insurance is important. But is it worth your money? What if you already have life insurance in place? Consider the following.
Trauma insurance can offer cover in areas where life insurance, income protection and disability insurance fall short:
Trauma Insurance (also known as critical illness cover) provides you with a lump sum payment if you suffer a serious medical condition such as a heart attack. A trauma benefit can be used to:
Trauma insurance can either be bought by itself or in conjunction with death cover (life insurance), cover for your salary (income protection) and disability insurance (TPD).
As little as $22.53
Over 50%
$100,000
$281,000
Trawling for the best trauma insurance quote can be a time-consuming exercise, but it's critical to do your homework to find the best policy to meet your medical and budget needs.
There are a number of factors to think about before you sign on to a policy. Here's a guide on what sort of questions you should weigh up.
It's important to compare what medical conditions are covered by insurance companies. Not all funds offer the same benefits for certain illness or injuries under trauma insurance, so you need to understand what is included, and if there are additional options that could enhance your cover.
Here are some built-in benefits to look for when comparing policies:
| Feature | What's covered? |
|---|---|
| Funeral Advancement Benefit |
|
| Terminal Illness Benefit |
|
| Future Insurability benefit |
|
| Waiver of Life Premium |
|
| Interim Cover |
|
| Premium Freeze |
|
| Accommodation Benefit |
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| Financial Planning Reimbursement |
|
| Benefit Reimbursement |
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| Suspension Cover Benefit |
|
Insurers may offer you other optional benefits to give you more comprehensive cover at an additional cost. There is a wide range of extras insurers offer, but the following are the most common.
| Optional benefit | What's covered? |
|---|---|
| Accidental Death Benefit |
|
| Business Future Insurability |
|
| Needlestick Cover |
|
It's essential that you're clear on the benefits included in your policy, and any extras that could enhance your cover. By doing this, you'll have peace of mind that the policy is right for you and your family.
You never know what curve balls life will throw your way, so it can be hard to calculate the amount of critical illness cover you'll need. There are many unforeseen treatment and rehabilitation costs that follow a trauma or critical illness, so you need to understand how becoming a sufferer will impact your individual circumstance or family situation.
There are personal and family factors you should consider when assessing how much trauma insurance you need. Here are some points to factor in.
You have a choice between two types of trauma insurance policies to ensure you're covered for the costs linked to one or more conditions. This is achieved through a standard or comprehensive policy.
Statistics show that suffering a trauma can amount to tens of thousands of dollars in someone's lifetime. A study conducted by Access Economics in 2009 revealed some staggering results.
Having a heart attack
Suffering a stroke
Cost of cancer
Cost of diabetes in Australia
Do I need a comprehensive policy?
There are some alarming statistics surrounding the likelihood of suffering conditions covered in a comprehensive policy. Australians live an outdoor lifestyle, and the increased exposure to the sun could mean you're more at risk of skin conditions like melanoma.
Here are some statistics compiled by Cancer Australia.
Severe diabetes is covered in both types of policies, but a complication is normally only covered in a comprehensive policy. The disease poses a huge challenge to Australia's healthcare system. Costs to the community and sufferers are huge, and the likelihood of contracting the condition is on the rise.
The Australian Securities & Investments Commission (ASIC) offers the following advice to consumers purchasing or comparing trauma insurance
According to Experien Insurance Services, by far the most common Trauma Insurance claim is for cancer (74%), followed by heart conditions (17%), stroke (5%), Parkinson's Disease (2%) and Multiple Sclerosis (2%).
Other conditions often covered by a Trauma Insurance policy include Alzheimer's disease, blindness, loss of speech, paralysis, chronic kidney failure, liver disease, lung disease, dementia, head trauma and major organ transplants.
Conditions where Trauma Insurance will only pay a partial benefit include benign tumours, osteoporosis, the loss of a single limb or eye, burns to less than 20% of the body and partial deafness or hearing loss in one ear.
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.
Trauma insurance is usually part of a package with life insurance. Life insurance covers death but gives you the option to cover additional life events e.g. trauma cover.
| Details | Trauma Cover | Life Insurance |
|---|---|---|
| What's covered | 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 payment | Lump sum | Lump sum |
Trauma insurance pays you out on the diagnosis of a condition (if covered by your policy). Total and permanent disability insurance on the other hand, pays out when you meet the insurers definition of a disability.
| Details | Trauma Insurance | TPD Insurance |
|---|---|---|
| Situations covered | You are diagnosed with a serious illness such as cancer. | You are unable to work due to illness or injury. |
| Condition of payout | 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. |
| Is it available through super? | No (not anymore) | Yes |
| Form of payment | Lump sum | Lump sum |
Income protection is primarily designed to replace some of your income if an injury or illness forces you out of work. Trauma insurance on the other hand provides lump sum for injuries or illnesses that are specified on the policy and not related to whether or not your put out of work.
| Details | Trauma Insurance | Income Protection |
|---|---|---|
| Situations covered | You are diagnosed with a serious illness such as cancer. | You are unable to work due to illness or injury. |
| How can you use the benefit? | 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) |
*The number of conditions covered will vary policy to policy. Always check the product disclosure statement to review what is and isn't covered.
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