GUIDES & RESOURCES

Trauma Insurance

It’s an uncomfortable thought, but any one of us could be affected by a major illness, like a heart attack, or cancer, at any time. While we can take measures to reduce our chances of being struck down, we can also be prepared with Trauma Insurance
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What is Trauma Insurance?

Trauma Insurance, also known as ‘critical illness’ insurance or ‘recovery’ insurance, covers you if you’re diagnosed with a specified insurable illness or injury. Typically paid as a lump sum, it provides financial assistance to access medical treatment, and may help pay for your rehabilitation, and reduce your work hours to help you focus on your recovery. Specific costs during a recovery period can include:

  • Medical costs not covered by your private health insurance
  • Any ongoing costs of treatment
  • Special transport requirements
  • Modifications to your house

What does Trauma Insurance cover?

Exactly what your Trauma Insurance covers will depend on the particular policy that you choose. That said, common types of illnesses or events you can generally claim against can include:

  • Critical Injuries such as severe burns or major head trauma. Trauma Insurance also can 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. Cover for cancer can cover most types of cancers like melanoma, malignant tumours, leukaemia, and prostate or breast cancer.

Is Trauma Insurance relevant for me?

Everyone’s situation is different, but here are a few basic questions to ask yourself when considering Trauma Insurance.

Do I have any dependents?

If you have kids or other family members who rely on you, Trauma Insurance could help look after their financial wellbeing should you suffer from a severe injury or illness.

What if I have a mortgage or other debts?

If you have ongoing financial obligations, Trauma Insurance could help you continue making payments while you recover.

Will I have enough savings if I couldn’t work?

If you don’t have enough savings to cover large, upfront medical expenses, Trauma Insurance could be a wise decision.

What are my financial means?

A good starting point is to consider how much income you and your family need for everyday living. If paying unforeseen medical bills would cause a significant shortfall, Trauma Insurance could provide peace-of-mind.

Do I have other support available?

In the event of an unexpected major illness, you might be able to get support from family or friends. But be realistic when considering this option. Situations can change and people may not be in a position to help when the time comes.

Would I qualify for government benefits or worker’s compensation?

Depending on your job or your illness, you could receive support through other means. It’s beneficial to look into your eligibility before taking up Trauma Insurance.

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

When applying for Trauma Insurance, you’ll typically be required to tell your chosen insurer anything that could affect their decision to cover you. This information could include parts of your medical history.

If you don’t provide them with all the requested information, they may reject your application. It could also have a negative impact on any future applications for trauma insurance. More specifically, failing to properly disclose any required information to your insurer could result in having any future claims denied, and your policy voided by the insurer.

Also note that if anything happens before your application is complete that could affect the outcome, you must let your insurer know.

Will I have to perform a medical assessment as part of my application?

As part of your application for trauma insurance, your insurer may request a medical assessment or medical reports provided by a doctor.

How much can Trauma Insurance cost?

Insurance quotes take into account lots of different factors—things like your job, family illness history, smoking habits, and chosen cover amount—so costs are calculated on a case-by-case basis.

Should I choose stepped or level premiums?

Once you’ve selected your cover, you’ll need to decide how to pay your premiums. Generally, you can choose between a stepped premium or a level premium.

Stepped premiums are generally cheaper from the outset than level premiums but they increase annually. The amount you pay can depend on factors like your age, and the type of policy you selected. Before opting for a stepped premium, consider the yearly rises to make sure you can afford the policy moving forward.

Level premiums generally stay the same over time,  and only increase when your insurer raises their premium rates, which an insurer may do from time to time. While these rises are generally less than the annual price increases with stepped premiums, you may pay more from the outset.

So how do I find Trauma Insurance policy?

At iSelect we’ve partnered with Lifebroker to help our customers compare from their range of life insurance policies and providers. Simply click here to start comparing policies online, or call our team on 13 19 20.

Sources:
1. https://moneysmart.gov.au/how-life-insurance-works/trauma-insurance

Last updated: 27/10/2020
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