Trauma Insurance Policy

Trauma insurance policies in Australia are designed to protect you and your family should you suffer from a severe health condition as listed in your insurer’s PDS. Due to the nature of incapacity caused by most critical illnesses, you can enhance your Trauma policy with an array of options available from various insurers.

Published March 10, 2017

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Trauma Insurance Policy Definition

Trauma Insurance generally pays a lump sum benefit on the diagnoses of a critical illness, when meeting the strict definition of that critical illness as specified in your Product Disclosure Statement (PDS). Generally, policies will also have a 90 day waiting period and a 14 day survival period which will need to be met.

Generally, with trauma insurance benefits, there is a 90 Day Waiting Period from the start of the policy. The waiting period means that if you are diagnosed or first become aware of a trauma condition or critical illness in the first 90 days from the commencement of the trauma policy, you will be excluded from receiving any benefit.

The waiting period may not apply if a new trauma insurance policy is replacing an already existing or similar policy that has the same sum insured and benefits covered.

Best Trauma Insurance Policy

When considering the best trauma insurance policy for you and your dependents, you must know what to look for. Plus policies are generally better than standard policies, however, pay attention to the number of conditions covered and how easy it is to meet the most prevalent claimable conditions and any built-in benefits or additional cost options available to you.

How to Choose The Right Trauma Insurance Policy For You?

When choosing a policy, be sure always to read the product disclosure statements (PDS), this way you’ll know what you are covered for and what you are not covered for. Speak to a specialist who can discuss the options available to you and the type of policy that may have stronger definitions than others or how you can structure your policy based on your requirements.

How to Compare Trauma Insurance Policies

A Trauma Insurance policy can offer financial protection for up to 60 critical illnesses, depending on your policy. In most cases, the number of trauma conditions covered will vary significantly from one insurer to the next. You will generally have two types of policies to choose from:

  1. Standard policy: Provides 30 to 44 core critical illnesses including heart attack, stroke and cancer. Standard policies are generally less expensive than Plus policies.
  2. Plus Policy: Covers an additional 10 to 15 lesser critical illnesses, such as severe early stage prostate cancer, breast cancer, melanoma’s, Osteoporosis and partial loss of hearing. Plus policies are generally more expensive because they cover more conditions.

Any critical illness that is covered in a Plus Trauma policy will generally receive a partial benefit with the amount dependent on your insurer and your specific condition.

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What Does Trauma Insurance Cover?

The policy can offer financial protection for up to 60 critical illnesses, depending on your policy. Generally two types of polices are available.

Standard Policies

Standard Policies generally provide cover for a range of critical illnesses including heart attack, cancer and stroke.

Plus Policies

Plus Policies generally provides the same cover as Standard Cover in addition to a number of additional lesser critical illnesses such as Carcinoma in Situ of the Breast, Early Stage Prostate Cancer, Partial Blindness and more.

Any critical illness that is covered in a Plus policy will generally receive a partial benefit with the amount dependent on our insurer and your specific condition.

When it comes to pre-existing medical conditions, i.e. a condition which you’re currently receiving treatment for or have been diagnosed with in the past by a medical practitioner/professional, some policies will cover you and some won’t. Policies that do cover pre-existing medical conditions may cost more.

Before taking out your trauma policy, be sure to review the Product Disclosure Statement (PDS) of each insurer. This document will provide you with all the essential information, i.e. what the policy does and does not cover, specific definitions of terms, as well as fees and charges that may be included in the product.

Structuring Your Trauma Policy

There are a number of ways you can choose purchase and structure your trauma insurance policy:

Stand Alone Cover

Critical Illness insurance can be purchased as a stand alone policy and does not have to be linked to life cover. By holding a stand alone cover, any benefit payments you receive will not affect the benefits of any other types of cover you have.

Below are examples of how stand alone cover may work in a claim situation:

Stand Alone Trauma Insurance Cover Monthly Premium
Cover Pre- Claim $500,000 $50.00
 Claim Paid ($500,000)
Cover Post Claim $0.00 $0.00
Stand Alone Life Insurance Cover Monthly Premium
Life Cover Pre- Claim $1,000,000 $100.00
Trauma Claim Paid ($500,000)
Life Cover Post Claim $1,000,000 $100.00

Please note that these tables are examples only and are not indicative of actual premiums or cover available

Combined (Linked) Cover

Critical Illness Cover can be combined or linked with other forms of personal insurance such as Life Insurance or Total and Permanent Disability Insurance. Generally, with a combined policy, any lump sum payments you receive from one cover type will be deducted off the benefits of the other policy types.

Combined policies are generally cheaper than stand alone policies.

The table below illustrates how a combined policy may work when a trauma claim is made:

Life Insurance Cover Trauma Insurance Cover Monthly Premium
Cover Pre- Claim $1,000,000 $500,000 $90.00
Claim Paid ($500,000) ($500,000)
Cover Post Claim $500,000 $0.00 $60.00

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

Flexible Policy Linking

Legislation that became effective on the 1st July 2014 prevents you from holding Trauma insurance inside super. However, you can choose to take out a combined policy when you have Life insurance or any occupation TPD cover funded by your super fund with the Trauma Cover linked to the policy. However your policy must be personally owned and funded by you.

Policy linking

Flexible Policy Linking allows you to take out a combined policy but separates the ownership of the policies between superannuation owner and Self Owned.

Trauma Policy Options Available

There are a number of policy options available to further enhance and customise your critical illness cover, giving your family another layer of protection:

Premium Options

There are generally three different options when paying your premiums:

1. Stepped Premiums

Stepped Premiums start off cheaper that level premiums but increase each year with your age. They can become very expensive as you get older.

2. Level Premiums

Level Premiums do not increase with your age each year and generally start out more expensive than Stepped Premiums but are often more affordable in the long term. At the age of 65 or 70 they will convert do stepped premiums.

3. Hybrid Premiums

A relatively new option, Hybrid Premiums begin on a stepped pattern but convert to level premiums once the stepped premiums becomes more expensive then the level premium.

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