Double Trauma

Double Trauma is another option only available in combined policies. Like Double TPD, it allows you to immediately reinstate the portion of life insurance reduced when a critical illness claim is made.

Generally it must be purchased at the time of the policy application.

Combining multiple benefits into one policy can often be a cost effective solution to your insurance needs.

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  • Cover 40 – 60 critical illnesses
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How the Double Trauma Options Works

While combined policies are a cost effective solution to taking out comprehensive cover, one of the draw backs is the reduction in other benefits when a claim is made.

Double Trauma allows for this reduced portion to be immediately reinstated following a claim. This differs from the Reinstatement Option which an only be used 12 months after a claim.

The portion of reinstated life insurance will generally be premium free. You may then elect to cancel the paid portion of your life cover and just use the free portion in your policy.

Case Study

Life InsuranceCritical Illness Insurance CoverPremium (monthly)
Initial Policy (pre claim)$1,000,000$600,000$120.56
Claim Paid Out($600,000)($600,000)-
Cover available post claim$400,000$0.00$67.35
Cover reinstated (generally immediately)$600,000$0.00Free
Cover available after Double Trauma option exercised$1,000,000$0.00$67.35

Donald is a 45 year old teacher who decides to take out $600,000 of critical illness cover and $1 million of life insurance in a combined policy.

As part of his cover, he decides to include the Double Trauma policy option, which he applies for at the time of his application. Unfortunately, 18 months later Donald suffers a stroke and is forced to undergo surgery as well as ongoing rehabilitation.

As a result of his stroke, Donald makes a successful claim on his critical illness policy and receives a $600,000 benefit payment. As a result of his claim, his life insurance benefit in his combined policy decreases by $600,000.

Fortunately, as Donald had chosen to include Double Trauma, the $600,000 portion of life cover is immediately reinstated, premium free, allowing Donald to retain full life insurance cover. He is still required to pay premiums on the $400,000 portion of life insurance cover that was not reinstated.

Generally, in some policies, Donald may have the option of retaining the full $1,000,000 life insurance cover or just the $600,000 premium free portion.

Please note this is an example only and is not indicative of actual cover or premiums available.

Published: April 11, 2017

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