Have you considered Trauma Insurance?

What is Trauma / Critical illness insurance?

Trauma or Critical Illness insurance provides a cash lump sum on the diagnosis of a medical condition. The number of conditions covered (benefits) varies widely, cheaper policies often offering fewer benefits.

The most common claims under these policies are for: cancer, heart attack, coronary bypass and stroke, although other conditions can be covered.

You don't have to die...

The benefit is paid when diagnosis is confirmed - not when you die of the condition. It provides you and your family with a lump cash sum to use when it is needed most for medical care or to pay the mortgage and other debts to relieve financial pressure

Why do I need Trauma (Critical Illness) insurance?

The choice of cover depends entirely on an individual's circumstances.

Trauma Insurance was first introduced into Australia in 1986. If you have heavy debts and are at pre-retirement age this cover may be important. A Critical illness can be just as damaging to family finances as a death and more so if medical bills result from a long lasting illness.

While recovery is certainly possible from the illnesses covered by trauma insurance, in most cases to qualify for a benefit the condition needs to be severe. Also if you suffer from a condition which is not specified you will not be covered. Income protection on the other hand covers any sickness or accident related injury causing temporary inability to work eg. stress, RSI or back injury. There is certainly room for both types of coverage however trauma will usually be the only option for persons who are not currently working.

Compare Quotes for Trauma Insurance Online now

Other topics

• Death benefit can be included
• Consider the Buy back option
• Illnesses which account for most claims
• Examples of why claims are declined
• Waiting Periods apply

Death benefit can be included

Some trauma policies also include a Death benefit, which will have the same pay out value as the trauma benefit. In this case, obviously, only ONE pay out will be made - either on a trauma or on death. There may be savings available in buying life cover as part of a trauma package rather than as a stand alone policy. Some trauma policies also cover Total and Permanent Disability (TPD). When packaging benefits in this way you should be aware that a claim on trauma or TPD will reduce the underlying life cover unless a buy back option is purchased.
>Top

Consider the Buy back option

Normally only ONE trauma benefit is ever payable to an individual under a policy - after a pay out you may become uninsurable and no longer able to buy Death, Total and Permanent Disability, Trauma or Income Protection cover from any insurer. So it is important to either purchase a buy back option or have sufficient cover to enable you to live out your remaining life on the proceeds of the claim. Buy back options are offered on some policies for an extra cost. If you purchase the option, you may, after a qualifying period of the benefit payment, re-purchase the death cover component.
>Top

Illnesses which account for most claims

When looking for a trauma policy, you will be confronted with a variety of conditions covered by the policy. However four of these conditions account for the great majority of claims. Recent claims experience from one insurance company showed the cause of claims to be about 62% for cancer, 13% for heart attacks, 11% for coronary artery disease and bypass surgery, 9% for strokes and the remaining 5% spread amongst the other conditions. Therefore the definitions of these top four conditions within the policy should be carefully scrutinized. While increasing the number of conditions covered increases the likelihood of an illness being covered by the policy, the additional conditions will usually come at the cost of an increased premium. 
>Top

Examples of why claims are declined

Read carefully the exclusions and other conditions for the traumas covered. Pre-existing conditions must be declared. Conditions caused by intentional self inflicted injury are usually excluded.

Claims are declined most frequently due to the following:

• claim outside cover defined by policy
• pre-existing condition had not been disclosed
• claim made before expiry of the waiting period
• claim made for a condition which was not covered
• suicide within 13 months of policy commencement

Waiting Periods apply

In most cases "accidental" types of traumas are covered immediately, although many insurers impose a waiting period (commonly 90 days after the policy is accepted) for certain illnesses eg cancer, stroke, heart attack. This is particularly important when changing or replacing policies as you may not be covered during the waiting period on the new policy for certain conditions.
>Top

Life insurance case studies

Read case studies for people who are:

• Single and working
• Married, no children and two incomes
• Married with children and one income
• Older couple approaching retirement with adult children

Could this be you? - click here to read now

>Top