What is trauma insurance?
In order to understand what is trauma cover, we must first have an idea of what trauma insurance is. The simplest definition is an amount of cash paid to you in the form of a lump sum, free of tax, after you have been diagnosed with a critical illness. The illnesses which are covered by these policies vary from company to company.
Even among those which are covered, there may be limitations to the coverage i.e. partial coverage / full coverage.
By and large, trauma insurance policies, unlike funeral insurance policies, have no waiting period before they become effective. However, there are exceptions to this: if, within the first three months of buying the policy, you get diagnosed with cancer, a heart condition or stroke, you won’t be allowed to make the claim immediately.
The reasoning offered by insurance companies in this regard is that prior to your diagnosis, these conditions would have manifested some symptoms before you had purchased the policy, releasing the insurance company from any liability. Once the 3 month period ends, you can make an insurance claim for any of the conditions listed in your policy, including the three exceptions (for the first three months only) mentioned above.
As already stated, covered conditions vary from company to company, but here is a generalised collection of medical conditions that they typical cover:
- Muscular Dystrophy
- Coronary By-Pass Surgery
- Heart Attack
- Benign Tumors
- Severe Burns
- Motor Neurone Disease
- Loss of Limbs
- Major Head Trauma
- Dementia & Alzheimer’s
- Chronic Kidney Failure
- Chronic Liver Disease
- Loss of Hearing
- Chronic Lung Disease
What is the point of this type of policy?
Trauma insurance is something that can take away your stress in a time when you are suffering from a critical illness. At this time, the last thing you need to worry about is money – you should be focused on your recovery – and this helps you do just that.
Perhaps the most distinguishing feature of this policy is that it is a ‘living’ insurance, meaning that you don’t have to die in order to benefit from it. The cash lump is paid to you as soon as your claim of suffering from a medical condition is processed and approved.
The medical conditions protected by trauma insurance can be of a fatal nature, so this type of policy aims to prevent your death, rather than finance those you leave behind.
Regardless of this, anyone that is listed as a beneficiary while purchasing the policy will be entitled to its benefit.
Who needs it?
Trauma insurance is particularly useful for those individuals who are living under conditions which are difficult as compared to that of a normal employed person. For instance, if you’re an immigrant without the support of your immediate family, you can use this insurance as a contingency plan, if you become seriously ill in a foreign country.
It will be equally beneficial for stay at home types, who take care of the household – since the lump sum could be used to manage the household and pay for childcare while they recover from their illness.
Another example will be an individual who has taken a mortgage on their property or has drawn out a considerable loan. There are some turns in life when one has to accrue debts in order to provide the best for their family; if you’re the sole breadwinner, it would be devastating for your family if you suffered from an illness that rendered you unable to pay your debts and mortgage.
In such a situation, this will provide you the funds to keep paying your debts even when you are unable to work.
Here are some of the obvious benefits of getting this are:
- A relaxing sick leave: As already mentioned, your time off for recuperation from sickness/injury needs to be as stress free as possible, and trauma insurance makes this possible by providing you the means to take a holiday without stretching your finances.
- Support the lifestyle changes that come with a medical condition: Certain medical conditions will dictate that you reduce the number of hours you spend on your job or abandon a particular hobby/routine. This kind of sudden change needs counselling in most cases – and with your insurance money, you can afford the best of it.
- Rehab / ongoing medical care: Even if the majority of your medical expenses has been covered through your health insurance or Medicare, there may still be an opportunity to get specialized medical assistance overseas or to sign up for a rehab program. You can spend the money received from your trauma policy on these specialized recovery options to enhance your chances of survival.
- Keep your family together: No matter what your prognosis, financial stress can cast a serious dent on the quality of your day to day life. There are numerous examples of couples splitting apart as a result of stress related to a medical condition. Thanks to your policy, you will be able to remove financial stress from the equation so your family suffers minimal stress as a result of your condition.
Is trauma cover worth it?
Benefits and drawbacks of trauma insurance cover:
The main points in favor of these policies are:
- It pays you a lump sum benefit, which is free of tax, and you can readily use it to cover medical costs, rent expenses, debts, mortgage, loss of income (both for you and your partner should they have to take time off their job to tend to your health) as well miscellaneous ongoing expenses incurred during your recovery period.
- Covers a wide range (typically 60) illnesses, meaning you will have a backup plan in case you protract even relatively rare medical conditions.
- There are a number of insurers which will also provide child cover¸ at no additional premium.
- Trauma cover can be combined with life insurance to maximize the protection it provides to you and your loved ones in your life, as well as death.
- There are multiple policy options available from most insurers, so you can get the one that matches your budget and requirements.
However, there are also some drawbacks which you would want to consider before you purchase a policy.
- A 90 day waiting period for some medical conditions – meaning you won’t be able to get the benefit if you get one of these conditions within three months of buying the policy.
- A 14 day survival period (in the event of a critical illness) – if death occurs within the fortnight, your insurance claim will become a life cover claim. Note: this condition is only applicable to those who have purchased a life insurance policy and a trauma cover policy in conjunction.
- This policy can be more costly than a standard life insurance policy.
- You will have to meet a prescribed definition of critical illness in order to get benefit from the policy.
Why would you consider this type of cover?
One might argue that this type of insurance policy is only for those individuals who are past their prime, and thus, more prone to developing health conditions – but the counter argument to this is the hectic and challenging lifetime many of those in their prime lead.
Such a lifestyle can take its toll and even lead to unexpected injuries or health conditions, which is where trauma insurance will come to your aid. The key thing to understand is that no matter what life throws at you, you won’t be caught off guard, at least money wise.
Where can I get a trauma insurance quote?
Insurance offers are extremely common these days, arriving in the mail, advertising on television and sometimes even via a direct phone call. They are often presented in a manner to hide their flaws and highlight their benefits, so deciding on an offer can be tricky business.
Fortunately, there are specific services geared towards helping you find and buy the best policy.
The best place to find the right policy today is a using the issuer’s company website. Although you can still acquire the services of an insurance agent, there will remain the risk of the individual being biased towards a particular insurer and so on.
Hence, a quote website, because of its impartiality is the best choice – it lays out the facts on screen for you to decide.
Additionally, you will have to pay for the services of an agent, whereas a quote generating website is typically free.
An insurance quote website has the main advantage of not forcing you into anything because of sales pressure. You can obtain quotes and comparisons of policy benefits from a vast range of insurers so you can reach an informed decision regarding the policy you will purchase.
You will have to enter some of your particulars such as your complete name, date of birth, gender, postcode, location and email address, following which you’ll enter your desired cover amounts. Then, it will be the website’s job to display a list of quotes from various policies best suited for you. Some insurance websites even offer discounts on any policies that you purchase through them!
Bear in mind though, that most online insurance websites do not take into account your life objectives, current financial situation and other particular details. It is best to compensate for them in your desired coverage amount beforehand by consulting a financial adviser, or if you haven’t done so, go for an insurance quote website which offers the facility of talking to one.
Compare trauma insurance
This company offers trauma insurance as part of their life insurance package which also includes two other options – total and permanent disablement, and death. Anyone from the age of 13 through 59 can sign up for their trauma coverage policy and can insure a sum up to $2 million.
The principle features of their policy include:
- A guarantee of future insurability, meaning that you can apply for increased coverage if circumstances change for you (children, marriage, first home etc.), without having to submit any further information regarding your health.
- Financial planning benefit: The insurer offers to pay a maximum of two thousand dollars towards the financial planning advice cost when they pay your claim.
- Accommodation benefit: If, after purchasing the insurance, you become totally disabled, to the point of being bedridden and requiring an immediate family member to look after you, while you are more than 100 kilometers from your normal residence, the insurer will pay for their accommodation expenses up to $250 a day for up to a fortnight.
Additionally, you can opt for the following features:
- You can opt to have your cover increased with inflation – the company increases your cover every year with the changes that occur in the Consumer Price Index.
- Waiver of premium: Opting for this feature means that, in the event of “total” disability, the company will waive premiums that you pay for insurance cover.
- Children’s trauma cover: This feature provides you with a lump sum of cash that you can spend on caring for your sick child. This feature also incorporates a death cover benefit that, once the child becomes sixteen years old, converts automatically to adult death cover, linked to the insurer’s standard trauma cover package.
- While you are receiving full benefits for a trauma condition, you can also receive partial benefits for 25 other conditions with the company’s Trauma Cover Partials package option. Furthermore, the insurer’s Trauma Cover Optimum package lets you go for features that allow you to restore death cover and trauma cover amounts one year after you have received payment for a trauma claim.
Note: Another popular insurance provider, by the name of AXA, has closed their service in Australia under that name, after having merged with AMP. Therefore, there policies are the same in all regards now.
This company offers a Critical Illness policy, which is identical to a regular trauma cover policy. A lump sum is paid when the purchaser is diagnosed with a critical illness such as cancer, stroke, heart disease etc. or when they undergo a major surgery.
You can buy their policy as a standalone product, or as a benefit attached with TPD cover, or as a benefit attached with their life insurance policy. The Critical Illness policy comes in two different variations to better match your requirements – the Critical Illness Standard and the Critical Illness Premier. The premier policy contains all the benefits of the standard with some additional perks added in.
Here are the benefits common to both the Standard and Premier policies:
- Paralysis support benefit: The company doubles the amount of money paid to you, up to a maximum of two million dollars if you suffer from paralysis.
- Death buy back benefit: You can purchase your critical illness cover after you have been given 100% of the benefit from your original cover.
- Inflation protection benefit: Changes in consumer price index are reflected in your cover so your premiums are safe from inflation.
- Premium freeze benefit: You can freeze your premiums while reducing your cover. This feature is available when you turn 30, on a stepped premium policy.
- Guaranteed future insurability benefit: You can increase cover without submitting additional medical details, should your circumstances change e.g. a marriage, another child, an increased business stake (if you’re a principal holder).
- Financial planning benefit: You are reimbursed up to five thousand dollars when you get financial planning advice after having claimed a benefit.
- Accommodation benefit: An immediate family member, who tends to you while you are confined to a bed, 100 km from home, is paid up to $250 a day for a fortnight as accommodation costs.
- Child’s critical illness benefit: You are paid a lump amount of ten thousand dollars if your child gets diagnosed with a critical illness specified in the policy.
The Premium policy has the following extra benefits:
- Advancement benefit: You’re given an advance payment to cover immediate expenses while your claim is under processing.
- Female critical illness: Female specific conditions such as congenital abnormalities / complicated pregnancies allow you to get 20% of your benefit amount in advance.
- Needle stick benefit: A feature specifically tailored to those individuals whose job includes exposure to needle stick injuries.
This insurance company offers Critical Illness insurance, again equivalent to trauma cover, in two options – standard and plus, to match your budget and requirements.
With the standard cover package, you get protection against the most frequently occurring critical illnesses with a smaller range of additional features, but at a reduced cost to match your budget.
With the plus cover package, you’ll get coverage for an extensive list of critical conditions and a large variety of additional options to best match your needs. You will have the maximum possible degree of protection against unforeseen medical emergencies.
The following are the highlights of their critical illness insurance policy:
|Child support||If your cover amounts to a sum of one hundred thousand or more dollars, you’ll be paid a lump sum of ten thousand dollars if your child is diagnosed with a child support benefit condition or passes away. This feature is only available for plus cover package holders.|
|Increases without additional medical details||You can apply for an increment in your Critical Illness insurance, when changes occur in your personal/business life, without having to submit further details regarding your health. This feature is available only for plus cover package holders.|
|Financial planning||The insurance company will reimburse up to five thousand for written financial advice that you acquire from a professional financial adviser, when they’ve paid you a benefit amounting to one hundred thousand dollars or more.|
|Freeze the stepped premium||You can request to freeze the stepped premium of your critical insurance once you’re thirty years old. Your premium will become constant, but your benefit will reduce with each passing year.|
|Death benefit||If the company can’t pay you your benefit because your death occurs in the 14 day survival period due to the critical condition for which you had originally made the claim, your beneficiaries will get paid a five thousand dollar benefit in any case.|
Comparing the three policies, it is apparent that there isn’t much of a difference between the main benefits offered. TAL and AMP, however, edge ahead of MLC because of their better extra benefits.
Among the two, TAL’s premium policy does have a few extra perks such as the female critical illness benefit and the needle stick benefit, so people to whom those conditions are relevant should consider it over AMP. Other than that, you won’t go wrong choosing one over the other.
Having read this article, you now have a reasonably sound grounding with matters relating to trauma cover insurance, from a consumer’s perspective. If purchased after appropriate deliberation and consultation, its advantages outweigh the drawbacks by a long shot, and it is recommended for all those individuals whose lifestyles are entirely dependent on their monthly salary.
It can even be combined with other policies to maximize your risk protection.
Peace of mind. Purchased.
Many people take the ‘it won’t happen to me’ mentality when it comes to considering the possibility of getting sick on the job for an extended period of time. This type of thinking can be disastrous if your job is your only source of income with which you are sustaining your family.
With trauma insurance you will have to take out a fraction of your monthly income to insure the future of your family against unexpected medical conditions that would confine you to bed (not able to do your job) without the means to support them.
You can’t really put a price on something like peace of mind, but that is exactly what you’re doing when you sign up for trauma insurance. You’re giving yourself and your family confidence that you’re covered even if your health does go downwards.