What is it:
When does it pay:
When you suffer a specified event such as heart attack, stroke or cancer.
What does it pay:
A lump sum amount, determined upfront by you and your adviser.
Who should have it:
How much is it:
Click here for a free quote
Most Australians are familiar with life insurance and income protection, but fewer will be familiar with trauma insurance.
Trauma insurance is a type of cover which protects you financially in the event of suffering a critical illness or medical event such as cancer, stroke or heart attack.
Similar to life insurance, it pays you a lump sum that is set when you take out your policy. The amount of cover you take is up to you, and will depend on your own personal needs and objectives.
How does trauma insurance help?
The funds received from a trauma insurance payout can be used for any purpose you see fit, but commonly the funds are used to cover large medical bills, pay for travel and accommodation for you and your family if you require remote medical assistance, and just generally to take away any financial pressures.
During the stressful time of going through a critical illness, trauma insurance will allow you to concentrate your energy on your recovery rather than how you're going to pay the bills.
How does trauma insurance fit into the mix?
Trauma insurance does not replace covers such as income protection or private health insurance, instead in complements these covers and acts as a safety for those surprises that can slip through the net.
Income protection insurance will help you if the illness requires time away from work. Whilst it will replace your income and cover you day to day bills, it will not provide you with the lump sum cash that will be required for the considerable medical bills that can accompany many critical illnesses.
Private health insurance will cover many of the costs involved with your critical illness, however even with the top level of cover there will still be considerable out of pocket expenses that need to be paid somehow.
What types of illnesses are covered?
The big three conditions that are most commonly claimed on for trauma cover are cancer, heart attack and stroke. Although these are the most common conditions, most trauma policies cover between forty and sixty different illnesses and conditions.
Other conditions covered by trauma insurance include multiple sclerosis, sever burns, liver and kidney disease, along with many other common critical illnesses.
How else can trauma insurance help me?
Trauma insurance can be used in ways that are seriously life changing.
Where a person knows that their quality of life is going to deteriorate as their critical illness takes hold, a trauma insurance payout can be used to enjoy time with their family whilst they still have some quality of life.
It may seem frivolous to spend a portion of your trauma policy payout on a family holiday to Disneyland when you are fighting the health battle of your life, but creating lasting memories with your family whilst you still can is probably the best investment you could make.
In other cases, there may be a potential cure for your critical illness, but the cost of treatment could be too expensive to consider. Instead of settling for a standard level of cover, the considerable funds received from your trauma payout can be used to fund your treatment.
Perhaps the best doctor and treatment for your condition is only available in Germany for example. In ordinary circumstances, traveling to Europe to obtain expensive treatment would be out of the question for most people, but trauma insurance can make it happen.
Using your trauma insurance you could pay to temporarily relocate your family to Europe whilst you give yourself the best possible chance of recovery by gaining access to the best doctors and treatment the world can offer.
A trauma policy doesn't just mean a few dollars in the bank when you get sick. In the case above, the funds from your trauma insurance policy could give you access to medical treatment generally only available to the wealthiest people in the world. It could genuinely save your life.
Trauma insurance companies
Trauma insurance is offered by virtually all life insurance companies in Australia. All of the country's largest and well respected insurance companies such as AMP, Comminsure and Asteron offer trauma insurance to Australians.
Whilst trauma cover is generally quite similar in its overall objectives from one insurance company to another, there are always some differences between policies.
Some of the differences may seem quite minor at first, but if that difference relates to the critical illness you need to claim on, you may find that choosing the right policy will be the difference between a successful claim and a declined claim.
Choosing the right amount of trauma insurance
There is no single answer to the amount of trauma insurance you should have. The amount of trauma insurance you need will depend on your own needs and objectives, as well as your monthly budget.
Some people want the maximum level of cover regardless of the cost, but for most people their level of cover will be affected by how much they are willing to spend on trauma insurance premiums.
A common method for calculating trauma coverage is to choose an amount to cover possible medical and associated expenses, say $250,000 to be safe, and then add an amount equal to a number of months income that will allow you to survive comfortable financially throughout your period of illness and recovery.
Generally speaking, the best way to calculate your trauma cover sum insured is to speak with a qualified financial adviser or planner. If you don't have access to an adviser of your own, you can contact an adviser through LifePolicy who can help you with calculating your insurance needs as well as finding the right policy for you.
History of trauma insurance
Trauma insurance was invented by a South African named Dr Marius Barnard. Dr Barnard was involved in the first successful heart transplant, and realised that whilst he could save a person's life, he could not repair their financial situation after they have fought their way through a long critical illness.
There is no doubt that trauma insurance has changed the lives of the many Australians who have claimed on their policies. Life insurance and income protection are important, but trauma insurance is certainly one type of cover that should definitely form a part of your financial security plan.
For more information or for a quote on your trauma insurance please click here.
More Trauma Information:
Trauma Insurance Australia
Trauma Insurance Case Study