Personal Insurance Series: Trauma Cover

Personal Insurance Series: Trauma Cover

Personal Insurance… Trauma Insurance

What is it?

The term Trauma Cover is used interchangeably with Critical Illness Cover. This type of personal insurance is often purchased in conjunction with Life and TPD insurance and provides a lump sum payout in the case that you suffer a specified illness or injury. Each insurer has a specific list of medical conditions that are covered and can be claimed upon. The wide range of medical conditions include heart conditions, neurological conditions, permanent conditions (such as blindness or loss of hearing), organ disorders, blood disorders, cancers or prolonged intensive care. Many insurers at certain levels of cover will have ‘partial’ definitions also, which cover illnesses before they reach their full extent. The various types of conditions are listed in detail in the policy disclosure statement of the insurer. It is vital to read this to ensure you know exactly what events you are covered for. There is often a reinstatement option that you can elect to purchase which will enable your trauma policy to be reinstated even after the benefit has been paid out; it will likely exclude the condition and all related conditions that you claimed on, but allows for continued cover.

Who is eligible?

Most insurers will allow applicants aged 16 at next birthday. Any pre-diagnosed medical conditions that you have suffered will be excluded and thus not eligible for claim.

In the event of a trauma, do you have sufficient finance to get by whilst you can not work and have extra medical bills?

Why do I need it?

As with all insurance, you need to consider why you need it and therefore what you would need to cover in the event of a trauma. Consider the medical costs related to your event and any amount that is not covered by your private health insurance (if you have it), the ongoing costs that relate to your trauma event, debt repayments whilst you are temporarily out of work and even what income you might need (if you don’t have/receive income protection). Do you have enough savings or equity to cover these potential costs?

If you hold private health insurance and therefore think that purchasing trauma cover is unnecessary, it is worth looking at the fine print to see what it really covers in the case of long term cancer treatment/drugs and hospital stays. Often people find that upon investigation, their private health does not cover the amount that thought.

Furthermore, you might like to consider the following facts in relation to how real the risk is that you will be affected by a trauma event in your lifetime. During 2017, it is estimated that one cancer case will be diagnosed in this country every 4 minutes, one heart attack every 10 minutes and 2.6 million Australians under the age of 65 are living with a disability. The facts can be scary so educate yourself and insure against the risks.

When should I get it?

When applying for trauma cover, pre-diagnosed conditions will be excluded form your cover. Logically, the earlier you purchase your cover, the less exclusions will apply and the more events you will be covered for.

 Tune in next week for general information on income protection insurance!


Australian Institute of Health and Welfare, ASIC