Trauma Insurance
Critical Illness

Trauma Insurance

Trauma insurance (also known as critical illness or crisis cover) protects you by paying a lump sum if you suffer a major illness or injury such as cancer, heart attack or stroke.

Trauma insurance benefits

It is important to work out individually what you need to protect and how much cover you need. The lump sum payment can be used for goals such as:

  • paying for your treatment and care
  • gaining access to the full range of rehabilitation services
  • relieving financial pressure by reducing debt
  • allowing your spouse to take time off work to be with you or look after the children
  • employing a carer, nanny or home help
  • funding the gap between what you earn and any income protection benefit you may receive
  • giving flexibility to amend your lifestyle or spend more time with family.

Without insurance, you and your family or dependants may need to run down savings, sell assets, and/or rely on family or Centrelink for assistance. You may find it difficult to maintain your standard of living or pay for the care and medical assistance you need. This can place extra stress on your recovery.

How trauma insurance works

What conditions are covered?

The actual conditions covered vary between insurers but generally include:

  • cancer 
  • heart conditions including heart attack and coronary artery bypass surgery
  • blood disorders including aplastic anaemia and medically acquired HIV
  • neurological conditions including multiple sclerosis and stroke
  • permanent conditions such as blindness and loss of limbs
  • organ disorders including chronic kidney disease and major organ transplant.

For a trauma claim to be successful the diagnosis must meet the policy definition of the condition as outlined in the insurance contract. For example, it is not sufficient to be diagnosed as having cancer. You must meet the definition in terms of type and severity.

Types of trauma / critical illness insurance

Stand-alone trauma cover

You can buy Trauma insurance as a stand-alone policy that includes just trauma cover and no death or total and permanent disability (TPD) cover. These products have a ‘survival period’ and no benefit is payable if you do not survive this period.

Linked trauma cover

You can purchase your cover so that it is ‘linked’ to your death or TPD insurance. With ‘linked’ covers, if you make a Trauma claim and the claim is paid, the other cover levels will reduce by this amount. Linking your cover in this way can reduce the cost of your trauma insurance. Policies may offer ‘buy-back’ options which allow the reduced cover to be purchased back after a period of time.

Child trauma cover

When a child suffers a serious illness during their childhood, the effects can be devastating for the family’s financial security. Child Trauma cover can be added to your policy to pay a lump sum to help with medical costs and gives the flexibility to afford time off work so you can be with your child.

Details to consider

  • You will not be able to claim a trauma benefit if you suffer certain conditions within a certain period (usually 3 months) from the date the policy commences, or you do not fully disclose the required health information at application time.
  • You should always carefully read the Product Disclosure Statement (PDS) and policy document for your selected insurance policy and keep these documents in a safe place.

Policy ownership

Trauma insurance is usually owned in your own name. The premium is not tax deductible and the proceeds from a successful claim are paid directly to you as a tax-free lump sum.

For policies purchased after 1st July 2014, trauma insurance is not available through superannuation. However, you can Flexi-Link a Trauma policy to a superannuation-owned Life or TPD insurance policy.

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