What is Trauma cover?
Trauma cover pays a lump sum in the event that you suffer a medical trauma that impacts your life and lifestyle. Over 50 different trauma events may be covered including diabetes, Alzheimer’s disease, loss of limbs, stroke, heart attack, cancer, and brain tumours.
In the event of a trauma, you and your family can use the lump sum to:
- Pay for lifestyle changes and rehabilitation. Some medical conditions can affect your mobility or cause disablement and you may need to purchase items or modify your home to help you cope with these changes
- Allow you, and your partner if necessary, to take some time off work to assist in recovery
- Pay off debts.
Trauma Insurance is not a replacement for Income Protection Insurance or private health insurance. It’s designed to help pay off debts and the costs of rehabilitation. You could use the money to pay for specialists or medical bills, make modifications to your home, pay off your mortgage or cover rental payments.
Does Trauma cover differ across different insurers?
Trauma Insurance: typically people establish between $50,000 and $200,000 cover depending on their situation. This ensures that if a trauma is suffered the lump payment will meet all costs associated with the trauma and provide temporary financial relief.
When deciding how much Trauma Insurance to establish you should take into consideration your financial commitments and how long they last. Plus think about in the event of a medical emergency:
- The cost of immediate care
- The ongoing cost of any therapy, special transport costs, adjustments to housing and lifestyle changes
- Any debts you have
You should also consider other insurances that you may be able to claim on in the event of a trauma event, particularly Income Protection insurance. Trauma insurance does have the highest premiums on a per dollar of cover basis because of the high rate of claims. However this can result in cover not being established at all. It is common for people to take out between $100,000-$250,000 trauma insurance.
Situation: 50 year-old couple with two adult children and a $250,000 mortgage with the father earning $45,000 a year and the mother $50,000. The mother is unfortunately diagnosed with breast cancer and is unable to work for a period of 3 months (making a full recovery).
Outcome: Trauma Insurance pays her $150,000, allowing the family to pay off meet immediate medical expenses and living costs, permits the husband to take extended leave from work to care for his wife.
How much does it cost?
Trauma Insurance is relatively more expensive compared to other forms of life insurance. Like other life insurance products, Trauma Insurance premiums can vary according to:
- Age (premiums may increase or cover decrease as you get older)
- Gender (women generally claim higher amounts so pay higher premiums)
- Whether or not you smoke