Trauma Cover Guide

What if you had a heart attack, cancer or a major critical illness? How would you afford the cost of recovery. Even though private health cover provides a subsidy to fill the gap of the cost of medical attention, the problem in many cases is that you still need to fork out the difference that your fund does not cover. This could be anywhere from a few hundred dollars to thousands of dollars for proper private medical treatment.

Just think of how long it could take you to recover if you had a stroke, cancer or a nervous system disorder. One month?, two months? or over one year? You could lose your income from employment, plus have to use your savings and investments to fund your recovery. Your life or TPD insurance will not pay out as you are still alive and will go back to work. The cost of recovery could significantly impact your family, lifestyle and financial plans. 

The good news for Australians is that there is a form of illness insurance available to you and its called Trauma Insurance or some companies also refer to it as Critical Illness Cover. This guide intends to cover some of the key areas that Trauma can cover you for and provide some insight to what the insurance companies may provide in their policies.

Trauma Insurance Cover - What Is It?

Trauma cover (also known as Critical illness insurance) provides a lump sum payment in the event of you being inflicted by a specific medical condition or trauma. Examples of these may include strokes, heart attacks, cancer, parkinsons disease and severe burns.

Trauma insurance main purpose is to assist you with costs such as rehabilitation, medical treatment and alternative therapy. It can also help with covering the cost of changes to your employment due to a traumatic event stopping you from be able to complete your normal work duties.

How does trauma cover work?

Should you experience a defined medical condition according to your trauma insurance policy there are few steps to follow. The first step is to make a claim based on the diagnosis of your condition. Depending on the policy you will need to survive a number of days before you are eligible for the payout. Typically this could be 14 days or more. Once you have been formally diagnosed and the medical condition is one that is provided for under your policy then you will get lump sum payout. In other words this is a form of "survival insurance".

What am I covered for?

There are numerous conditions that Trauma can cover you for, it varies depending on the insurance company policy and the options you decide to take.

Here is a list of some of the major medical conditions you can get cover for:

Medical Conditions Covered

Other illnesses

  • Heart Attack
  • Coronary artery disease with by-pass surgery
  • Coronary artery angioplasty
  • Repair and replacement of a heart valve
  • Aorta surgery
  • Primary pulmonary hypertension
  • Open heart surgery
  • Loss of hearing
  • Chronic liver disease
  • Chronic lung disease
 
  • Cancer
  • Early stage cancer
  • Breast cancer
  • Brain tumour
  • Blindness
  • Chronic kidney failure
  • Major organ or bone marrow transplant
  • Severe burns
  • Loss of speech
  • Severe rheumatoid arthritis

How much does trauma cover cost?

The cost will vary according to a number of factors such as your age, health, level of cover, occupation and whether you smoke or not. Premiums can range from as little as $20 per month to larger amounts accordingly, depeding on the factors above and the insurance company you choose. Typically it can be of the more expensive insurances because the conditions it covers are very common and the reason why its claimed upon so often.

Is it tax deductible?

In most cases the premium is not tax deductible and will depend on your situation. As the Trauma insurance pay out is designed to be a tax free lump sum you cannot claim any tax deductions while paying the premium. If you did you could end up with a hefty tax bill on the payout as it could be seen a taxable payment instead of a tax free lump sum. Advice should be sought from a qualified financial planner or risk insurance specialist.

How much trauma cover can I get?

This will depend on your requirements and also the insurance company you choose to go with. Typically there are certain limits that they will insure you up to without paying excessive premiums. For example some policies will allow you to get cover up to $3,000,000 without additional requirements above the standard forms and medical tests required. For cover above this you may be asked to provide additional information such as financial statements or perfom other medical tests.

Try the online trauma calculator to work out much you might need here:

How do I apply?

Trauma insurance can be put in place using the help of a life consultant who will provide you with an application form that will ask about your personal details such as date of birth, whether you are a smoker or non-smoker, occupation, income, health history and past times. Being honest is the best policy, by providing accurate information the insurance company can properly assess the risk and provide you with the correct policy and premium amount. One thing to note is that if you have had a prevous medical condition such as that listed on the policy you may either have to pay an excess on your premium or you could get an exlcusion for that condition on the policy. In some cases a previously existing medical condition can cause the risk to be too high and they may not approve your application for Trauma insurance.

How do I choose the right policy?

Apart from the standard medical illnesses the policy covers, there are lot of extra options you can choose when finding the right Trauma policy. Extra options will vary from company to company so here a just a few as an example:

  • Child Benefit Cover - cover you younger children for a specific amount
  • Additional disability cover
  • Buy Back cover - post a claim be able buy back a portion or all of the cover for other conditions that you have not claimed on
  • Additional lump sums for specific illnesses

In order to make a proper decision you will need to speak to an insurance specialist or financial adviser to find out if these options are suitable for you.

Get the right quote for Trauma insurance and save up to 20% here.