Trauma Insurance - the features and benefits

Trauma insurance is a part of the life insurance family and assists Australians in the event of serious illness.

Also known as critical illness insurance, this type of cover is designed to protect policy holders and their families from the financial impacts of serious illness. It achieves this by paying out a lump sum amount that can be used to ease the financial burden during this stressful time.

The concept for trauma insurance came from a South African doctor who was involved in the world’s first heart transplant. Dr Marius Barnard worked with the life insurance companies to develop trauma insurance after realising that although he could save a person’s life, he could not save them financially.

Suffering a critical illness is bad enough on its own, however the financial consequences can often be just as devastating, and can remain a burden long after you’ve recovered physically.

What conditions are covered?

The conditions covered by trauma insurance do differ from one insurer to the next, however the major conditions covered by each policy are generally quite similar.

Trauma insurance claims most commonly involve cancer, heart attack or stroke. Whilst these conditions are the most common, there are dozens more illnesses, conditions and events which are covered by trauma insurance.

Other conditions covered by trauma insurance can include multiple sclerosis, deafness, paraplegia, Parkinson’s disease, loss of speech and many more.

How can the proceeds be used?

There are no restrictions on how you use your trauma insurance payout, however typically the proceeds are used to cover out-of-pocket medical expenses and to provide a financial buffer.

The financial buffer can be used to reduce debt, cover lost income and provide a safety net during an unpredictable and difficult time. Ultimately the proceeds should allow you to concentrate on your recovery instead of worrying about financial matters.

Options available

One of the most common options available with trauma insurance is known as trauma reinstatement.

Normally when you make a claim on trauma insurance the policy will end. Depending on the reason for the claim, it can be difficult to obtain trauma insurance again after you have made a claim. With trauma reinstatement your policy can be automatically reinstated after twelve months, however the condition you claimed for will be excluded from the reinstated policy.

Choosing a policy

Trauma insurance policies do differ between insurers, so it is important to do your research when selecting a trauma insurance policy. Generally a policy that covers a wider range of conditions will be preferable, but it is also important to see how the policy treats different conditions.

For example some policies will only pay a claim on multiple sclerosis once you have reached a certain stage of the illness which can take many years, whilst other policies will pay immediately upon diagnosis. The difference can have a huge impact on your quality of life.

Is trauma insurance worthwhile?

Suffering a critical illness can be a life changing event. Even if you recover physically, the financial impact can remain for many years, and many families may never fully recover financially.

Trauma insurance can even improve your chances of surviving a critical illness, as the proceeds from a trauma insurance claim can be used to help you in accessing the best medical treatment and rehabilitation facilities in the world.

You may not have enough money yourself to travel interstate of even overseas to access the best treatment, but armed with the proceeds from your trauma insurance policy you may be able access the best without worrying about the cost.

If you agree that your health and your family’s financial security are priceless, then trauma insurance is definitely something you should consider.