Trauma cover, also known as critical care or critical illness insurance, works differently from income protection or life insurance. Trauma insurance is there for you if you should become the victim of a serious accident or illness, and will pay you a lump sum to cover your medical and living expenses whether you are unable to work or not.
Trauma insurance differs from other illness and accident policies in that it covers specific medical conditions, such as heart attack, cancer, stroke, organ transplant and even blindness, which are specified at the time you purchase the policy. Conditions covered by Trauma insurance are usually not covered by a Total and Permanent Disability (TPD) policy, and may vary from one policy to another. Most Trauma insurance cover does include cancer, stroke, and heart disease, but the best way to learn more about the types of trauma and critical care insurance available is to compare trauma insurance policies and find out if one sees right for you.
You can purchase trauma insurance as a stand-alone policy or incorporate it with your life insurance policy. If you’re not sure what choices to make regarding trauma insurance, don’t hesitate to ask your financial adviser for guidance.
But why would anyone purchase trauma insurance for a condition that may or may not strike?
Australians are falling victim to cancer at increasing rates every year, and heart disease and stroke remain all-too-common health problems for many Aussies.[i] But medical advances offer greater survival rates every year, and more and more victims of these diseases can live for years beyond diagnosis. [ii]
However, living with chronic illness is challenging at best, and can have a serious impact on your family and your lifestyle. Trauma insurance can help ease the financial burden that is often the result of a serious medical diagnosis that may interfere with your ability to work at your current profession, or if you find yourself suddenly forced to leave work for medical reasons.
When you first purchase trauma insurance you can establish what diseases and medical conditions your coverage will include, and determine what lump sum payment you think will be needed to help you with the transition from your former lifestyle after suffering a traumatic medical event. Your lump sum payment can be used to pay monthly bills and can cover medical costs that may not be covered by your health plan, such as rehabilitation, home health care, and travel expenses for treatments. When you compare trauma insurance policies you will find that they vary from one policy to another, so it’s important to scrutinize as many choices as you can in order to make a decision that suits your budget and health concerns.
Trying to plan for the possibility of becoming seriously ill or suffering a traumatic injury is not easy, and not something any of us want to think about. Although you cannot plan for a medical problem, you will find some peace of mind in knowing that you will be financially independent, and neither you nor your loved ones will be burdened with financial worries due to your loss of income or medical expenses.
In 2007 mainstream life risk insurers paid a total of $245 million in trauma payments in Australia.[iii] As we age, the likelihood that we will face serious health issues increases, which is why trauma insurance is such an important part of a complete insurance plan. Speak to your financial advisor if you have any questions regarding trauma or critical care insurance, and ask them for guidance in choosing the best coverage for maintaining your lifestyle and obtaining quality medical care for as long as you may need it. Think of it this way – if you find yourself in the position to file a claim against your trauma insurance, you are going to receive a lump sum payment not because you are facing mortality, but because you are going to go on living.
In general trauma insurance is paid after the policy holder has survived for 14 days post diagnosis, at which time the likelihood of survival increases significantly. Medical studies show that the survival rates of breast cancer, for instance, increased from 71 percent to 87 percent between 1982 and 2004[iv]
People who can benefit from trauma insurance often have a family, a mortgage, credit card debt, a business or business partners who depend on them, and insufficient financial resources to carry them through an unexpected medical event and the associated costs. The payout on a trauma insurance claim can help you rest assured that your obligations will be met.
Keep in mind, trauma insurance also encompasses critical illnesses and the associated costs. The Cancer Council of NSW has estimated that treatment for breast cancer can cost more than $40,000 in out of pocket expenses, and lost income and productivity during treatment. In fact, women have a one in four chance of being diagnosed with a critical illness between the ages of 30 and 64, and one in four will be diagnosed with cancer by age 75.[v]
Remember, being diagnosed with a critical illness does not mean you won’t live for many years after. You can get affordable trauma insurance to provide for your financial needs in the event that the unexpected happens to you. Visit MultiCover.com.au to compare trauma/critical care insurance policies and remember to discuss any questions you have with your financial advisor.
ii AIHW and Australasian Association of Cancer Registries, Cancer in Australia 2001, 2004 3 Statistics and research: Breast cancer statistics in Australia, www.breasthealth.com.au/statisticsresearch/, 2009There are a few factors you should consider before choosing the right life insurance policy for you.