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We all know about the benefit of life insurance, but what happens when an ongoing illness is diagnosed? Is there a way to reduce this risk? Trauma insurance, sometimes known as critical illness insurance, is an insurance policy that covers you if you have been diagnosed with a critical illness or have sustained an injury through accidental trauma. Trauma insurance has been available in Australia since the mid 1980’s and is considered a highly reputable, convenient and useful form of insurance.
How trauma insurance works
Trauma insurance is paid when a person has received a confirmed diagnosis of a qualifying condition, unlike life insurance where money cannot be accessed until the person has died. It is also possible to have a death clause incorporated into trauma insurance policies. Paid in a cash lump sum upon diagnosis, trauma insurance can be used to cover medical expenses, mortgage or any other debt.
It is also possible to manage immediate, larger debts with trauma insurance. Policies can have total and permanent disability protection incorporated at the request of the claimant, and this type of cover is generally paid in weekly or fortnightly instalments. Although this is ongoing, it is only sufficient to cover the cost of day to day living.
If you have a family history of serious illness, you should consider this type of policy. Trauma insurance may also be suitable for those in high-stress or high-risk jobs.
Basic trauma cover
At the discretion of the insurer, and depending on the individual policy, trauma insurance covers a range of illnesses including, but not limited to:
- Cancer
- Heart attack
- Coronary bypass surgery
- Stroke
- Major burns
- HIV
- Quadriplegia
- Blindness
A more exhaustive list can be found at Insurance Watch. Some things that may limit your claim are:
- Pre-existing conditions that were known to you but withheld from the insurance company at the time of taking out the policy
- Conditions that have not been specified in the policy or that are not covered by the policy
- Self- inflicted injury
- Suicide, which is rarely covered in the first thirteen months of a policy
- HIV contracted through means other than those associated with occupational hazards.
Trauma cover FAQ’s
Is trauma insurance only available to working people?
No. Unlike other forms of insurance, trauma insurance may be the only option available for persons who are not currently employed.
How bad must my condition be before I qualify?
Most policies require illness to be severe.
Is there a waiting period?
Most accidental trauma cases are paid immediately but there is often a waiting period of between ten to ninety days, depending on your insurer.
How much will it cost?
Some insurers offer weekly, fortnightly and monthly instalment options (with payments starting from as little as $2.50). Annual fees generally range from $90 to $550.
