Trauma Insurance

While medical and technological advances have improved our chances of surviving a life-threatening illness, it also comes with a price tag. Due to loss of income and the additional costs of medical expenses, you might now have a ‘living’ financial risk. Critical illness insurance (CI) is designed to address this risk.

Trauma Conditions are not the same for every insurer. You need to carefully consider which trauma insurance and policy type best suit your needs. It’s recommended that you review policies based on the amount of conditions an insurer covers and how easily it is to meet the definition required to have the insurer pay out a claim.

What is Trauma Insurance?

Trauma insurance is a policy that provides you with a lump sum for financial support in the event of being diagnosed with a critical illness, as defined by your insurer. The benefit can be used to help pay medical expenses, loss of income and provide for your family while you recover.

Getting a Trauma Insurance Quote

To ensure you choose the best critical illness cover for you, it’s advisable that you compare a variety of providers’ quotes, and features side by side with the help of a specialist.

Compare Trauma Insurance Quotes & Features Side by Side

  • Covers 40 – 60 Critical Illnesses
  • Includes Cancer, Heart Attack and Stroke
  • Additional Cover with Plus Policies
  • Quotes from 11+ Insurers
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How it works

Before taking out a policy, there are a number of key things you need to be aware of:

  • You will generally need to survive for at least 14 days from the date of diagnosis before you are eligible to receive your benefit.
  • If death occurs within 14 days, you will not be eligible for a benefit but will be eligible for a life insurance benefit if you have life cover as a linked benefit.
  • There is generally a 90 day waiting (qualifying) period on all policies in Australia at the start of your cover, which excludes any critical illnesses diagnosed or becoming apparent to a reasonable person during this time.
  • Although trauma premiums are not tax deductible, the lump sum paid is tax-free, and you have complete control over how the money gets spent.

What does Trauma Insurance cover?

You are entitled to the lump sum benefit when you are diagnosed with a critical illness, covered by your insurer and meet the specific definition of a traumatic event as outlined by your trauma cover.

According to an in-depth research study done by Zurich, for their Misinformed booklet, around half of all Australians older than 30 will suffer from one or more of these diseases at some point in their lives:

  • One in eight Australian women will develop breast cancer
  • Around 55,000 Australians suffer a heart attack each year
  • Each year about 12,000 people who have had a stroke will suffer another stroke
  • Around 3000 men die every year from prostate cancer
Trauma Insurance covers up to 60 critical conditions to provide financial support to the insured, should they suffer from a condition listed. In general, 80% of claims is for heart disease, cancer, heart attacks and stroke. The number of illnesses you are covered for is dependent on your choice of insurer and policy type; Standard vs. Plus.

Standard policies cover 30 – 43 major critical illnesses including cancer, heart, neurological and permanent conditions as well as organ and blood disorders, intensive care and other events.

Benign brain tumour Multiple sclerosis Burns of limited extent
Benign tumour of the spine Muscular dystrophy Critical care
Cancer Severe rheumatoid arthritis Absence of hand or foot
Aortic surgery
Cardiomyopathy
Medically acquired HIV Congenital blindness
Coronary artery by-pass surgery Occupationally acquired HIV Congenital deafness
Heart attack Chronic kidney failure Developmental dysplasia of the hip
Heart valve surgery Chronic liver disease Down’s Syndrome
Open heart surgery Chronic lung disease Disseminated intravascular coagulation
Cardiac arrest Major organ transplant Eclampsia
Primary pulmonary
hypertension
Pneumonectomy Ectopic pregnancy
Triple vessel angioplasty Systemic sclerosis Hydatidiform mole
Alzheimer’s disease Coma Infant death
Brain damage Intensive care Infantile
Cognitive loss Loss of speech Tetralogy of fallot
Dementia Severe burns Transposition of great vessels
Parkinson’s disease Severe diabetes Systematic lupus
erythematosus (SLE) with lupus nephritis
Major head trauma Terminal illness Trache-oesophageal fistula
Stroke Diagnosed benign tumor Angioplasty
Encephalitis Angioplasty Minor heart attack
Meningitis and/or meningococcal disease Minor heart attack Hydrocephalus
Colostomy and/or ileostomy
Blindness Hydrocephalus
Colostomy and/or ileostomy
Severe endometriosis
Deafness Severe endometriosis Adult insulin dependent diabetes mellitus*
Loss or paralysis of limb Adult insulin dependent diabetes mellitus* Esophageal Artesia
Motor neurone disease Severe burns Spinal bifida
Aplastic anaemia Severe diabetes myelomeningocele
Cleft lip and/or palate Terminal illness Stillbirth
Diagnosed benign tumor hydrocephalus Neonatal death

Plus Policies cover an additional 10-20 more minor conditions including loss of hearing or sight, early stage cancer, diabetes, Crohn’s disease, partial Alzheimer’s disease and more. For these conditions, you will typically receive a partial payment. Because Plus Policies offer cover for additional illnesses, they are generally more expensive.

Diabetes Complication Carcinoma in situ of the Cervix Uteri
Carcinoma in situ of the Vulva or Perineum of limited extent Carcinoma in situ of the vagina
Chronic Lymphocytic Leukemia Hydatiform Mole
Melanoma Partial Blindness
Partial Loss of Hearing Severe Osteoporosis

What affects my insurance premiums?

Your insurance premiums will generally be affected by:

  1. The policy type you choose: Standard or Plus
  2. Your sum insured
  3. Your premium structure: Level premiums vs. Stepped premiums
  4. The insurer selected and their rates/premiums for the policy
  5. Your Age and Gender
  6. Smoking status
  7. Health status
  8. Occupation
  9. Additional policy options selected

Claiming on your Trauma Insurance policy

Whichever policy type and insurer you choose will clearly state which illnesses are covered and how severe it needs to be in order for it to pay out. For you claim to be processed quickly, make sure you provide the insurer with all the requirements needed. To know what those requirements are, speak to an experienced adviser to help you through the process.

Some policies will pay you the full assured amount on diagnosis of a critical illness; others pay out a percentage of the amount, depending on the severity of your illness. It’s important that you read the Policy Disclosure Statement (PDS) and speak to a professional before you make your decision.

Financial protection against critical illnesses is vital to any person, especially as your financial responsibilities increase and the older you get. As you age, the probability of suffering a critical illness increases. The older you get, the higher your premium becomes because your risk of developing a critical illness increases with every year. If you have a mortgage, people dependent on your monthly salary or need to repay debts and medical expenses while you recover, you will need Critical illness cover to help you.

Trauma insurance pays out a lump sum when you are diagnosed with a critical illness, as defined by your insurer. Total and Permanent Disability (TPD) insurance, on the other hand, pays out a lump sum in the event of your total and permanent incapacity. Income Protection covers up to 75% of your income and pays a monthly benefit should you be unable to work due to illness or injury.

We detail the full differences, pros and cons of TPD and income protection in this handy guide.

Many basic Critical illness cover policies in Australia may appear similar, but their definitions and requirements for paying a claim can differ dramatically. The easiest way to finding a policy that is suitable for your circumstances is to compare the leading insurers in Australia and to speak to a specialist adviser. At Life Insurance Direct, we compare the 10 leading insurers in Australia and give you a detailed quote from all of those insurers.

Published: April 11, 2017

Ask an Expert?

2 Comments

  • Marcus |

    Hello,

    I’m an Australian citizen but living and working overseas at the moment (in the US). In the event that my wife or I are diagnosed with a critical illness, it’s likely that we would return to Australia for treatment to have support from our friends and family.

    Is it possible for me, an Australian currently temporarily living overseas, to purchase a trauma coverage policy from an Australian insurer?

    Thanks,
    Marcus

    • Russell SPECIALIST
      Russell |

      Hi Marcus

      Yes, it is possible for Australian expats living in America to obtain life and or trauma insurance from select Australian life insurance companies however you will need to have an intent to return to Australia within a certain time frames.

      What I suggest is for you to contact our office on +61 2 99297355 (AEST Mon – Friday 8.00 am – 6.30 pm) and ask one of the specialist consultants to complete a pre-assessment for you around your unique situation and they will be able to confirm what insurers will offer cover and if so on what basis (standard policy terms) or for example they may put a territorial exclusion on your policy if you are intending on visiting or residing in dangerous counties while abroad.

      I hope this is of assistance.

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