What is Trauma Insurance?
Trauma (or Critical Illness or Crisis Cover) insurance provides a lump sum benefit if you are diagnosed with a specified illness or injury. These types of products cover up to 50 major illnesses or injuries that will impact on a person's life and lifestyle, such as cancer, heart attack or stroke.
Trauma insurance is not a replacement for income protection or private health insurance. Rather, Trauma Insurance is designed to help pay off debts and the costs of rehabilitation, filling any financial gaps left by income protection insurance, TPD insurance and private health cover.
You are also able to purchase trauma insurance for your children. This provides a lump sum benefit if your child is diagnosed with a specific illness or injury, helping to cover any medical or other expenses that you incur as a result of the trauma. To find out more about child trauma insurance, click here.
Buying Trauma Insurance
Trauma insurance may be available as a "linked" benefit to a life insurance policy, or as a stand alone product. Trauma insurance is not available through superannuation.
Trauma cover is relatively more expensive compared to other forms of life insurance, and care should be taken to ensure the policy selected includes the illness and injury cover that meets your needs. This is particularly important because the number of conditions covered can vary between insurers, as can the definitions and thresholds of each illness or injury.
The benefits of a choice of insurers
Cornerstone Insurance can help you obtain the most suitable coverage at the best price, by comparing the numerous insurers who provide trauma insurance. Because the precise terms of the policy are particularly important for Trauma Insurance, we thoroughly research the offerings of each insurance house and ascertain which is best for you, balancing the cost of premiums and the specific benefits of each policy. We simplify the process of choosing the right insurer for you, whilst ensuring you get value for money.
Linked Policies
Linked cover is where one policy is linked to another. While premiums for linked cover are usually lower (and may also have tax advantages), if you receive a payout under the Trauma policy, the sum insured for the linked policies are reduced by the payout amount.
Therefore, if the Trauma policy is linked to a life insurance policy, the life insurance sum insured would be reduced by the sum of the Trauma Insurance payout. However, there are options available that can 'replenish' your insurance sums without undergoing further underwriting. .
A 'Double Trauma' option allows you to reinstate the sum insured under your life policy within 14 days of it being reduced by a trauma claim - without the need for further medical underwriting (i.e you do not need to go through another health risk assessment). The premiums may be waived on the reinstated life sum insured.
A 'Trauma Reinstatement' option allows the trauma sum insured to be reinstated within 12 months of being reduced in full by a trauma claim, without the need for medical underwriting (i.e you do not need to go through a health risk assessment again.)
How much cover?
Cornerstone Insurance will work with you to assess the appropriate level of cover for your circumstances. When determining your Trauma Insurance requirements, we rely on statistical data from the Australian Institute of Health and Welfare to help assess the likelihood of you suffering from a traumatic illness. We also consider the Total expected lifetime economic cost associated with traumatic illness.
The financial impact on you and your family will be driven by a combination of the following costs:
- The cost of immediate care
- The cost of ongoing care and lifestyle changes
- Your desired income stream should you stop working (and how his may interact with your income protection insurance).
- Current financial situation and debt levels.
Tax Considerations
Trauma Insurance premiums are not tax-deductible, however the proceeds are tax free in the event of claim.
Contact us
For impartial, individualised and expert advice on how trauma insurance can protect your financial security, contact Cornerstone Insurance.