These days the rate of critical illnesses (things like heart attacks, strokes and cancer) are increasing, and because of modern medicine the likelihood of surviving is also greater.
These illnesses however can result in you being out of the workforce for considerable periods which can cause great financial hardships for you and your family especially if ongoing medical treatment is needed.
This is where trauma insurance comes in – a form of life insurance that can potentially help.
What is Trauma Insurance?
Trauma Insurance (also commonly known as critical illness insurance) pays you a lump sum of cash upon diagnosis of a medical condition. The biggest difference in premiums often depends upon the number and types of illnesses/conditions that are covered.
What add-ons are there for this kind of insurance?
Depending on your insurance provider there are commonly a number of additional benefits you can add to your cover (obviously the more you have the more expensive it will be).
Two important ones to consider are buy-back options and reinstatement options. If your covers are linked within your insurance and you make a claim usually your life cover will be reduced by the amount of the payout. If you had equal amounts of $300k for both and you made a claim on Trauma, you will have $0 left of Life cover.
There are options which allow you to buyback Life and Trauma Cover (there may be waiting periods before you can do so). Reinstatement options allow you to buy back more trauma cover after a certain time period commonly without having to undergo a medical. This is important to consider as once you have fallen to one illness other insurance companies may not protect you.
When you have trauma insurance you usually can also take out child cover or baby care cover (for mothers) which protect you child if certain complications arise.
Not available through super
Unlike other insurance types Trauma is most commonly not available through your super. Depending on what options you choose though, it can be relatively inexpensive and is important as even with Private Health insurance not all of your expenses will be covered.
Why do you need Trauma Insurance?
You only have to look at the statistics to know that most people will experience or know someone close to them who has experienced a critical illness. For example one in two men and one in three Australian women will be diagnosed with cancer before 85 (Australian Institute of Health and Welfare).
People are living longer meaning they are more likely to experience some type of trauma event, and with medicine and treatment improving they are more likely to live through the event.
How much will Trauma Insurance cost?
Cost of trauma insurance will depend on how comprehensive the cover is, how much cover you have, your age, smoking status, gender, health and what other add-on features you choose.
Having linked or stand-alone cover will also affect the cost, as well as whether you have stepped or level premiums.
Some insurance companies may provide discounts based on the amount of cover you have, the types of cover you have, and family discounts. Paying yearly may also reduce your premium amount.
Read before you sign
Make sure you know what conditions are covered in your insurance. Some illnesses may have certain restrictions or conditions on them so it is important to understand this.
Also make sure you understand how your insurance is structured including how the add-ons work and in what event. You should also investigate what happens with your insurance company if you were to make a claim (including reinsurance options and how long it would take to receive payment).