What is Trauma Insurance?
Trauma Insurance is one of the newest types of policies available and is becoming more and more popular as a means of wealth protection. Trauma Insurance, like Life Insurance and TPD Cover, is a lump sum payable; however it is paid on a medically diagnosed event rather than disablement like TPD Cover. There is no disability test that needs to be met; simply the life insured needs to meet the listed medical definition of the event. Trauma Insurance is designed primarily to assist in covering the medical costs of a significant medical event and to provide a level of capital to cover lost incomes. As such lower levels are normally recommended when compared to Life and TPD Insurance.
Trauma Insurance can be linked with Life Insurance and TPD Insurance policies or it can taken alone. When linked with Life Insurance, Trauma Insurance can be cheaper, however when linked and claimed, it can deduct the balance of the linked Life Insurance.
What Trauma Insurance events are covered?
Trauma Insurance policies can offer as little as 5 critical illness events and on average offer around 40 critical events ranging from cancers, heart attacks and strokes to loss of limbs and adult onset diabetes. There are also policies on the market that offer up to 60+ events including partial payments for events that do not meet the requirements for a full payment (e.g. lower cancer grades and single loss of use of limbs). Some common Trauma Insurance policy events include;
Trauma Insurance policies vary widely on the market both in number of events covered and also how the level of cover provided and it is important to seek a policy that offers a range of definitions and is also strong in its key events as around 85% of all trauma claims are made up of either Heart Disease or Cancer with around 60% of claims for Cancer related events.1 Policies are also always being updated to keep up with medical advancements and changes in critical illness treatment options, so it is also important to have a policy that is updated from time to time. Many older closed policies do not have this upgrade feature.
Trauma Insurance has more restrictive entry and expiry ages compared to life insurance, with most policies expiring at either age 65 or age 70. Most trauma insurance policies have the option to revert to a ‘loss of independence’ policy at the expiry age allowing policies to be extended to age 80. Generally, the maximum amount of Trauma Insurance that can be applied for is $2m.
Trauma Insurance is becoming increasing important to consider with increasing rates of critical illnesses and advances in medical technologies, the need for financial security to cover the costs of these events cannot be overlooked. A recent study by the NSW Cancer Council 2 found that the average total direct financial cost of cancer to a family is around $114,500, including loss of income (not only by the person suffering the event, but partners and care givers), medical expenses and rehabilitation. The study also found that the ongoing burden cost of a cancer event can be as high as $800,000! With 1 in 3 males and 1 in 4 females suffering a critical illness before 75, the need for Trauma Cover is becoming increasingly important. Trauma Policies and underlying definitions can be difficult to compare and advice is paramount to ensure the right policy is obtained.
Primoris Financial compares Trauma Insurance from over 12 major Australian Life Insurance companies. To discuss your Trauma Insurance requirements or to compare Trauma Insurance quotes contact us on 1300 881 543 or submit a Trauma Insurance quote request here.
1Claims we Paid – 2010 – AMP
2The Cost of Cancer in NSW’ A report by Access Economics Pty Limited for The Cancer Council NSW 2006