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Trauma insurance (or critical illness insurance) provides a lump sum payment if you suffer serious injuries or medical conditions. You can use this money however you’d like, though you might want to use it to pay for your medical treatment, living expenses or household bills while you take some time off work. Whether you need trauma insurance is a personal decision. However, you might want to consider it if:

  • You want peace of mind for your family during a difficult time.
  • You’re unsure whether your health insurance will sufficiently cover your medical costs if something happened to you.

How much trauma insurance cover do I need?

When taking out trauma insurance, you might want to take out a level of cover that can make up for any income lost while you rest and recoup. To estimate the amount you need to insure for, consider how you’d pay for the following without your regular income if you couldn’t work:

  • Mortgage repayments
  • Credit card debt
  • School fees
  • Medical expenses
  • Household bills

Are you already covered?

You might want to look into whether you’d be eligible for any payouts from a life insurance policy should you experience an illness or injury, either through an insurance company or your superannuation fund.

You can also try our free life insurance calculator to get an idea of the right level of cover for you. If you’re still not sure if a trauma insurance policy is right for you, you might want to speak to a financial adviser.

What conditions does it cover?

The definition of a trauma event will vary between insurers and the policy you choose. However, here are a few serious injuries and medical conditions that you can typically make an insurance claim for:

  • Cancer
  • Heart attacks
  • Organ failure
  • Severe burns
  • Major head trauma
  • Loss of limb.

To understand exactly what you’re covered for, as well as any exclusions or restrictions, refer to the relevant Product Disclosure Statement (PDS).

Frequently asked questions

How much does trauma insurance cost?

It depends on a number of factors. Your smoker status, family medical history, age and gender all contribute to the premium you pay for trauma cover. The amount you pay will also depend on the premium structure that you choose. The two options are:

  • Stepped premiums, which increase year-on-year as you age. These are usually cheaper to start out with but could end up costing you more over your lifetime in the long-term.
  • Level premiums, which are based on your age when you take out the policy and don’t increase over your lifetime. These are usually more expensive to start, but you may save money over your lifetime.

For either premium structure, your premiums can change if the insured sum changes, by either indexation or a voluntary. It’s also possible that your insurer chooses to increase their premium rates which would affect both stepped and level premiums. Changes in government charges like stamp duty could also lead to an increase in your premiums. For any changes to your insured sum, your premium increase will be based on your age when the increase occurs.

What’s the difference between income protection, total and permanent disability (TPD) insurance and trauma insurance?

When it comes to figuring out what type of cover is right for you, remember:

  • Trauma insurance is for when you fall seriously ill and is paid out as a lump sum.
  • TPD insurance covers you if you’re permanently disabled and can’t resume work. It’s also paid out as a lump sum.
  • Income protection acts as a replacement for a percentage of income. It’s generally paid out regularly (e.g. fortnightly or monthly) for a set period in the event you’re badly injured or critically ill and can’t work.

Is anyone eligible for cover?

Most Australians can get covered by a trauma insurance policy, with a few exceptions and exclusions. For one, if you have a pre-existing condition at the time of taking out a trauma insurance policy, you may have trouble getting covered for related trauma, depending on the condition.

Top tips for Trauma Insurance from Steven Spicer, our Executive General Manager of Health, Life and Energy

  1. In the unfortunate event you fall ill to two different medical conditions covered under your trauma insurance policy consecutively, most insurers offer a reinstatement option. This option allows you to buy back your trauma insurance plan after 12 months, so if you’re diagnosed with the second illness after this period, you may be able to claim your trauma insurance payment for both.
  2. Make sure you’re aware of the conditions covered and level of severity required by your trauma insurance policy. Depending on circumstances (such as your age and lifestyle), you may be predisposed to conditions not covered by your specific policy. It may be worth comparing your options to see which policy covers your conditions.
  3. While Medicare may cover the bulk of the medical costs related to some traumatic diagnoses, there are often other unexpected financial implications. You will most likely need to take time off work and potentially make changes to your living environment to better care for your health, so this is where trauma insurance can help.

The information provided here is general only and does not consider your personal objectives, financial situation or needs. Before you decide to purchase a product, it is important to read the relevant PDS.

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