GUIDES & RESOURCES

Trauma Insurance

Not only does major illness affect you and your family physically and emotionally, but they can also take a significant financial toll. With trauma insurance, you can help prepare yourself and your family for these unforeseen events.
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A major illness, such as a heart attack, stroke, or cancer can affect anyone during their lives. Keep reading to learn more about trauma insurance, including how it works, and what’s generally covered in a standard policy.

What is trauma insurance?

Trauma insurance, also known as ‘critical illness’ insurance or ‘recovery’ insurance, is a type of insurance policy which provides you with cover if you are diagnosed with a specified illness. Trauma insurance is paid as a single, large payment which can help you to pay for things such as:

  • Medical costs above your private health insurance
  • Any ongoing costs of treatment
  • Special transport requirements
  • Adjustments to housing
  • Any other financial requirements arising from your illness

What does trauma insurance cover?

What your trauma insurance will cover will ultimately depend on which policy you choose. Here is a list of the common types of the illnesses or events you can generally claim against1:

  • Critical Injuries: such as severe burns or major head trauma. Trauma insurance will also often include cover for injuries leading to blindness, loss of hearing, or loss of a limb
  • Critical Illness: includes heart conditions, neurological disorders, organ failure or transplants and blood diseases
  • Cancer: covers most types of cancers like Melanoma, Malignant Tumours, Leukemia, and Prostate and Breast Cancer

Is trauma insurance suitable for you? Here’s some things to consider

While everyone’s circumstances are different, there are a few basic questions you can ask yourself to help you decide if trauma insurance is suitable for you2:

  • Do you have dependents?: if people rely upon you to provide for them trauma insurance will help you ensure their financial well being if you suffer a from a severe injury or illness
  • Do you have a mortgage or other debts?: if you have ongoing financial obligations trauma insurance will help you to continue to meet your payments
  • Do you have sufficient savings if you can’t work?: if your savings won’t cover large, upfront medical expenses trauma insurance could be a suitable option
  • Your level of private health insurance: if you have a high level of private health cover you may already have protection for a lot of things included with trauma insurance
  • Your financial means: consider how much income you and your family require to live day-to-day, and if you require the protection of trauma insurance if you need to pay unforeseen medical bills
  • Other support available to you: in some cases you may be able to get support from family and/or friends if you are affected by a major illness
  • Possible eligibility for government benefits or worker’s compensation: depending on your line of work or the illness you sustain you may receive support through other means. Make sure you consider these before taking up trauma insurance.

What do you need to tell your insurer before purchasing a policy?

When you apply for trauma insurance, you will be required to inform your chosen insurer of anything that may affect their decision to provide you with cover. The information required may extend to parts of your medical history.

If you don’t provide the insurer with all the requested information, they may reject your application. This may also have a negative effect on any future applications you make for trauma insurance.

It’s also important to note that if anything should happen before your application is complete that may affect the outcome, you must let your insurer know3.

Should I choose stepped or level premiums?

Once you’ve selected the cover that is suitable for you, you’ll need to decide how to pay you premiums. Generally, you will have the choice between a stepped premium or a level premium.

With stepped premiums the amount you pay will increase each year. The amount you are required to pay will depend on factors such as your age, and the type of policy you have selected. If you opt for a stepped premium be sure to consider these rises to ensure you can afford the policy moving forward. Generally stepped premiums are cheaper from the outset than level premiums, but this may reverse the longer you hold the policy.

Level premiums remain the same over time and only increase when the provider of your policy raises their fees. While these rises are generally less than the annual price increases with stepped premiums, you will be paying more in premiums from the outset. Level premiums may be a good option if you intend on holding your policy for a long time, or want cost predictability4.

Compare trauma insurance policies online with Lifebroker

With Lifebroker you can compare trauma insurance policies online from their range of providers to find a policy and insurer that suits you and your family. Get started online today, or call our friendly team on 13 19 20.

Sources:

1.https://www.mlcinsurance.com.au/insurance-options/critical-illness/
2.https://www.tal.com.au/recovery-insurance/
3.https://www.moneysmart.gov.au/insurance/life-insurance/trauma-cover/
4.https://www.moneysmart.gov.au/insurance/life-insurance#stepped/

Last Updated: 16/12/2019

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