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What is trauma insurance?
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Stroke is the
leading cause of long term
disability in adults and is the
cause of 25% of all chronic
disability in Australia.
Heart, Stroke and Vascular Diseases
– Australian Facts 2001. Australian
Institute of Health and Welfare,
National Heart Foundation of
Australia and National Stroke
Foundation of Australia, 2001
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Trauma insurance – also referred to
as critical illness insurance –
provides a lump sum benefit if the
insured is diagnosed with a number
of trauma medical conditions. The
actual conditions covered will be
specific to a policy and described
in the product disclosure statement,
but in general may include
conditions like cancer, stroke,
heart attack, heart disease, organ
transplant and other serious
illnesses.
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Why buy trauma insurance?
Trauma conditions tend to be major
illnesses that are often life
altering. Trauma insurance is
designed to assist with the hospital
and other medical expenses that
related to the illness, as well as
to provide capital for ongoing
everyday expenses and home loan
repayments. Unlike income protection
insurance, trauma is based on
diagnosis of a defined critical
medical illness and is not related
to whether or not the insured is
able to work. The insurance may thus
enable the insured to take
additional time off work to focus on
getting well again.
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How
much cover is required?
- As
with other types of life insurance,
determining a suitable sum to insure
will depend on the specific
situation and needs of the insured
and their family. In additional to
providing capital to pay off debts
(like home loans and personal loans)
and fund living expenses if the
insured is no longer able to work or
needs to take time off work,
expenses related to the illness
including medical expenses and
necessary changes to lifestyle
should also be considered.
- If
unsure about the right amount of
cover, advice from a professional is
recommended. It is also recommended
that the lump sum insured be
reviewed regularly, especially with
changing circumstances that may
effect whether the trauma / critical
illness insurance sum insured
continues to be sufficient.
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Features and options
The actual trauma conditions that
are covered by different policies
will vary, so it is worth reviewing
the product disclosure statement and
comparing cover from more than one
life insurance provider. Trauma or
critical illness insurance can
generally be arranged as a
standalone insurance policy, or as
an extension to a term life policy.
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Taxation of trauma insurance
The lump sum benefit paid by trauma
insurance on the diagnosis of a
defined critical illness is tax
free, and can be used for any
purpose.
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