Trauma insurance cover provides a lump sum for severe injuries or critical illnesses, like early stage cancer, head injuries, and heart conditions. Its purpose is to support you while you recover, providing financial relief.

What is Trauma Insurance?

Trauma illness, also known as critical illness or recovery insurance, provides you with a lump-sum payment in the chance that you are diagnosed with a serious illness or injury. This payment is designed to aid you in your recovery, providing financial relief while you take time off of work.

In general, you can apply for critical illness insurance if you are between 18 to 55 years of age, though age limits can differ per provider.

Unlike income protection - which is a monthly payment to cover a loss of income, trauma insurance is a single, significant payment, that allows you the flexibility to use it in any way that you may like. You might choose to:

• Hire in-home care.

• Pay for incurred debts, such as your mortgage

• Pay for therapy.

• Cover out of pocket costs

• Make changes to your housing

Coverage varies between insurance providers, but typically, breaks from work due to mental-health related conditions are not covered. It is important that you review what conditions are covered in your Product Disclosure Statement (PDS).

What about coverage amounts and eligibility? Payment amounts can vary per provider - Medibank.au for example offers covers starting at $50,000 up to $1,000,000.

How Can You Buy Trauma Insurance?

Trauma insurance can be purchased through an insurance broker, a financial adviser, as a bundled policy, or directly from an insurance provider.

We recommend that you speak to an insurance adviser who can assess your financial circumstances to choose the best critical illness policy. Selecting the right trauma insurance policy requires careful consideration of your personal circumstances and specific needs, making professional advise invaluable.

A note about superannuation:

Due to alterations in the Australian legislation that was introduced on July 1st, 2014, superannuation funds no longer offer trauma insurance policies.

If you were a part of a fund that offered trauma insurance before July, 2014, you may still have existing coverage.

What Factors Affect Trauma Insurance Premiums?

There are several factors that affect trauma insurance premiums:

• Policyholder's age, sex, and smoking habits

• Job type (relevant only for high-risk work such as handling explosives)

• Premium payment structure: flat rate or increasing with age

• Coverage tier: basic "Standard" or enhanced "Plus" plans

• Total number of medical conditions included

• Availability of partial benefit provisions

• Inclusion or exclusion of death benefits

• Pricing for extra features like trauma coverage reinstatement or life insurance buyback

Typically, trauma insurance premiums increase rapidly after the age of 50, as the likelihood of claiming increases.

In addition, the premiums for smokers tend to be a 100% higher than non smokers, considering their risk profiles - women also tend to pay higher premiums than men as they live longer, thus, are likelier to suffer from a critical illness or injury.

How Does Trauma Insurance Compare to Other Insurance Types?

• Income protection: pays a monthly benefit, usually 70% of your salary, if you are unable to work due to an illness or injury.

• Life insurance: pays a one-time, lump sum to your beneficiaries in

• Income protection: Pays a monthly benefit (up to 70% of your salary) if you’re unable to work due to an illness or injury.

• TPD insurance: Pays a lump sum if you’re permanently disabled and unlikely to return to work.

• Life insurance: Pays a lump sum to your beneficiaries if you pass away or are diagnosed with a terminal illness.

• Private health insurance: Helps pay for hospital stays and out-of-hospital services but doesn’t cover your lost income or lump-sum needs.

What Does the Claims Process for Trauma Insurance Look Like?

To make a claim, you will need to submit doctors records and other documents. These can include:

• Your personal details

• Documents of your diagnosed illness or injury

• Any associated medical tests, reports, and treatments

• Any other relevant medical records

Trauma insurance policies generally have a waiting period of 90 days before a claim can be made. To make a claim, you must meet the policy’s medical requirements, with the insurer and complexity of the case affecting the approval timeline. Depending on the circumstances, the approval process can take between 6 to 12 months.

It is important that during this time, you are honest, and provide comprehensive, accurate information. Any discrepancies in information can result in either a delay, or rejection.

FAQ

Answered below are popular questions.

• Is Trauma Insurance Tax Deductible?

As per the Australian Taxation Department, trauma insurance premiums are not tax deductible. However, insurance that replaces a loss of income, such as income protection can be deducted from your taxes.

• How Much is Trauma Insurance?

The average cost for trauma insurance for a non-smoking adult can start at $14 a month for a standalone package, while bundled plans with life insurance can go up $25 a month.

• Is trauma Insurance Worth it in Australia?

Yes, trauma insurance in Australia is worth it. It ensures protection in the case of a serious illness or injury that leaves you unable to work.Trauma insurance plans are especially beneficial if you face medical risks or occupational hazards at work.

• What Conditions are Covered by Trauma Insurance?

Trauma insurance covers a range of life-altering injuries and illnesses, which can include: heart attacks, stroke, major organ transplants, severe burns, blindness, paralysis, alzheimers, and so on. Although many conditions are covered, the exact number depends on the insurer and their policy. This information would be provided in their Product Disclosure Statement (PDS)