What is Trauma Insurance?

Even with Medicare and the private healthcare system, a bad injury or an unexpected diagnosis can put huge pressure on your finances. That’s where trauma cover may be able to provide some assistance.

What is trauma insurance?

Trauma insurance, also known as trauma cover or critical illness insurance, provides a lump sum of money to cover immediate medical expenses and other financial needs when a critical illness or injury occurs.

While income protection helps to replace a portion of your income when you cannot work due to illness or injury, it can be useful to have a lump sum of money to cover your immediate medical and financial needs.

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What types of conditions are covered by trauma insurance?

The conditions that you can insure yourself for will vary from policy to policy, but will typically include as standard various cancers, heart disease and/or heart attack, and stroke.

Beyond these common diseases, there are several dozen other conditions that may also be included, depending on your policy and insurer. Some examples may include major burns, organ transplant, and motor neurone disease. The product disclosure statement (PDS) for a policy will detail what conditions are covered.

This article on trauma insurance provides a more detailed list of just a few of the things that may be covered by a policy.

What types of conditions are covered under Trauma insurance

  • Alzheimer’s disease
  • Aortic surgery
  • Aplastic anaemia
  • Benign brain tumour
  • Benign tumour of the spine
  • Blindness
  • Cancer
  • Chronic kidney failure
  • Chronic liver disease
  • Chronic lung disease
  • Cognitive loss
  • Coma
  • Deafness
  • Dementia
  • Encephalitis
  • Heart conditions: Cardiomyopathy (heart disease), Coronary artery by-pass surgery, Heart attack, Heart valve surgery, Open heart surgery, Out of hospital cardiac arrest, Triple vessel angioplasty
  • HIV (medically acquired or occupationally acquired)
  • Intensive care
  • Loss of independent existence
  • Loss or paralysis of limb
  • Loss of speech
  • Major head trauma
  • Major organ transplant
  • Motor neurone disease Multiple Sclerosis
  • Muscular dystrophy
  • Parkinson’s disease
  • Pneumonectomy
  • Primary pulmonary hypertension
  • Severe burns
  • Severe diabetes
  • Severe osteoporosis (before age 50)
  • Severe rheumatoid arthritis
  • Stroke
  • Systemic sclerosis
  • Terminal illness

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How much trauma cover should you have?

If you choose to take out trauma cover, the amount of cover you should have will depend upon both your family and financial situation. If you also have an income protection policy then it will most likely be your main source of ongoing cashflow, with trauma insurance instead designed primarily to provide for your short-term needs.

As a basic guide, a trauma insurance policy may be used to:

  • Provide a lump sum for immediate medical needs involved in treatment and recovery.
  • Pay off any personal debts such as a mortgage.

 

How much does trauma cover cost?

The following premiums are current as at our 2016 Advised Life Insurance star ratings. Monthly premiums have been rounded to the nearest dollar.

Trauma (Male – Stepped)

Monthly Premiums ($/month)

Occupation Sum Insured Min Max Average
Twenties Professional $200,000 $28 $47 $36
White Collar $150,000 $24 $38 $29
Light Manual $150,000 $24 $38 $29
Blue Collar $150,000 $24 $38 $29
Thirties Professional $250,000 $44 $69 $53
White Collar $250,000 $44 $69 $53
Light Manual $200,000 $37 $59 $46
Blue Collar $200,000 $37 $59 $46
Forties Professional $250,000 $106 $162 $132
White Collar $250,000 $106 $162 $132
Light Manual $200,000 $87 $138 $112
Blue Collar $200,000 $87 $138 $112
Fifties Professional $150,000 $197 $336 $263
White Collar $150,000 $197 $336 $263
Light Manual $100,000 $133 $247 $181
Blue Collar $100,000 $133 $247 $181
Trauma (Female – Stepped)

Monthly Premiums ($/month)

Occupation Sum Insured Min Max Average
Twenties Professional $200,000 $28 $67 $40
White Collar $150,000 $23 $52 $32
Light Manual $150,000 $23 $52 $32
Blue Collar $150,000 $23 $52 $32
Thirties Professional $250,000 $45 $93 $61
White Collar $250,000 $45 $93 $61
Light Manual $200,000 $38 $80 $52
Blue Collar $200,000 $38 $80 $52
Forties Professional $250,000 $88 $153 $121
White Collar $250,000 $88 $153 $121
Light Manual $200,000 $72 $135 $103
Blue Collar $200,000 $72 $135 $103
Fifties Professional $150,000 $122 $254 $185
White Collar $150,000 $122 $254 $185
Light Manual $100,000 $83 $198 $128
Blue Collar $100,000 $83 $198 $128
Source: www.canstar.com.au  Average premiums current as at 17 August 2016. Average premiums have been rounded to the nearest dollar.

To find out more about trauma insurance and what’s on offer from some of the providers in the market, read our annual Life Insurance Star Ratings report.

Read more about Advised Income Protection Insurance

What’s the difference between stepped and level premiums?

For trauma cover as well as other insurances like life and total and permanent disability cover, premiums typically increase as you get older. This is because you become more likely to make a claim as you age. With stepped premiums the cost of your policy increases each year, but with level premiums expected future increases are factored into your premium from the beginning, meaning a higher cost from the start but no annual increases apart from potential increases due to inflation or changes to the fees charged by your insurer.

How to take out trauma insurance?

There are two main ways to purchase trauma insurance – either direct from an insurer, or through a financial planner or broker.

In the past, trauma insurance was also offered to members of some super funds. But according to MoneySmart, since July 2014 super funds are no longer able to offer trauma cover to new members. However, if you were in a super fund that offered trauma cover before this time, you could still be covered. You can check if you’re covered by contacting your fund, reading your fund’s PDS or by taking a look at your super statement.

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