Trauma Insurance

WHY GET TRAUMA INSURANCE?

Trauma insurance can help provide financial peace of mind in the event of a major illness that leaves you unable to work. There is always uncertainty about when or whether you will be unable to work due to unforeseen circumstances.

For example, you may be the victim of a work incident or become ill due to unfortunate or pre-existing health issues. In that case, you would want to know that you will receive a monthly benefit to help manage treatment costs and living expenses.

Trauma cover (also referred to as crisis recovery trauma), provides a lump sum payment on the diagnosis of serious medical conditions. Benefits vary widely according to the situation, with generally fewer benefits available at lower level premiums.

Trauma cover can apply to individuals between the ages of 17 and 59, with full cover confirmed extending up to 70 years of age.

Trauma cover is highly recommended if you are already dealing with large existing debts, such as a mortgage, and are still at pre-retirement age. It also may be worth getting trauma cover as a form of income protection if you do not qualify for income protection insurance.

Trauma life insurance gives you peace of mind, knowing that all your family’s savings will not all be spent on covering costly medical treatment.

A major illness often affects family finances just as seriously as death, and even more so when you are faced with the possibility of ongoing medical costs. This is when you need a substitute for income protection should you not qualify for this type of insurance.

However, trauma cover does not issue a trauma benefit payment for an intentional self-inflicted act, so be aware of this fact before signing any product disclosure statement. But before you can apply for trauma cover, you will need to answer specific health assessment criteria with a medical practitioner and provide them with a medical history to determine if this is your best course of action.

HOW IT WORKS

Trauma cover is also known as major illness insurance or as recovery insurance. You will receive a lump sum payout should you receive a critical illness or severe injury diagnosis. These diagnoses cover physical injuries rather than mental health diseases and include severe head injuries, strokes, heart problems, and cancer. Reading the product disclosure statement will give you a better idea of what cover to expect from this type of insurance product as they differ between insurers. After applying for this product, there may be a waiting period before you can submit a trauma claim. However, life insurers can provide you with more details about this type of policy and whether it suits your financial needs and individual circumstances.

Once approved, the waiting period is over, and if you are unfortunate to receive confirmation of a specific diagnosis, you can submit a trauma claim. This trauma benefit will pay out after diagnosis confirmation (not if or when there is a death from the condition). Once confirmed, the life insurer will provide you and your family with a lump sum of cash.

You can then use that payment for:

• Medical costs
• Relief of financial pressure (ongoing bills, mortgage, and other debts).
• Professional therapy costs such as nursing, physiotherapy, and transport for medical reasons
• Housing relocation should this be necessary.

WHAT TO SHARE WITH THE INSURER

Always be upfront about your individual circumstances when applying for trauma cover or life insurance products. These details can affect your claim. The more honest and detailed you are about your medical history, the more likely you are to be successful when you submit an application and a trauma claim.

Details that insurers look for when applying for trauma cover and life insurance include:

• Your age
• Job type
• Medical background of sickness and injury
• Lifestyle issues such as alcohol consumption and cigarette smoking
• Whether you participate in a high-risk sport

Should your application not include questions about sickness and injury, the chances are that the medical definitions will be less distinct, and the policy will likely have more exclusions than ones that require a history of your health.

When applying for trauma cover, life insurance, or income protection insurance, the insurer will use this information to decide your application.

Their decisions have specific implications such as:

• Whether they should provide you with trauma, income protection insurance or life insurance to cover how much income lost
• The benefit periods
• The cost of your monthly stepped or level premiums
• The anticipated benefits that are to be paid monthly should you be unable to work
• Policy terms, conditions, inclusions, and exclusions

Share truthful information, and your claim will be met but missing, or incorrect information can lead to your trauma claim being declined.

OTHER INSURANCE PRODUCTS TO CONSIDER

You may or may not qualify for trauma cover, so you should consider other insurance products such as income protection in case of sickness or injury. You simply do not know if some trauma events can render you unable to work or pay for personal or business expenses.

In such an event, if you have an income protection policy or life insurance, at least you know that you can provide for your family as the life insured. And like trauma cover, you can discuss the waiting period associated with these policies.

You can also discuss whether a policy is tax-deductible, if premiums are pre-tax income or post-tax income, or if the benefit payment attracts a tax deduction.

You can discover the answers to these and other questions from an authorised representative who will provide you with general advice and expert financial information on how much trauma insurance you may need. These experts will also offer their services as dedicated claims consultants to streamline the process when you make a claim.