Should You Get Trauma Insurance?

In the late 1980s, Insurance Companies in Australia introduced (somewhat nervously) a new insurance product called Trauma Insurance.

Trauma Insurance was designed to pay the policy holder a lump sum if they suffered a serious medical condition such as heart attack, cancer or stroke.

From these humble beginnings, Trauma Insurance has become one of the most important insurance covers available to the public.

Historically, the majority of claims have been due to heart disease, cancer and stroke. However, typically policyholders have cover for up to 50 different medical conditions when they take out a policy.

Should you get Trauma Insurance?

Should you get Trauma Insurance?

Despite the attractions of insuring against major illnesses and other conditions, less than 5% of the Australian Public have trauma insurance cover.

When selecting a suitable policy, remember that cheapest is not always the best, and it is important to consider policy conditions, definitions and the availability of comprehensive extra features.

Consider the below situation:

Kathy was 27 years old and took out a standard Trauma Insurance policy for $300,000 in 2005. When she was diagnosed with breast cancer in 2008 at the age of 30, the claim was paid in full and her cover ended. This helped Kathy to recuperate and cover the cost of expensive medical treatment during this period.

However, Kathy is now 32 and has twin daughters and a large mortgage.

Unfortunately, Kathy can no longer get Trauma Insurance, which worries her.

In recent years Insurance Companies have introduced a new option referred to as ‘Trauma Buy-Back Benefit’.

This means that 12 months after paying a claim, the person can begin paying premiums again. They’ll have cover for 100% of the original cover amount.

The reinstated cover excludes claims for the condition which gave rise to the original claim payment. The policy are still covers all other conditions.

Find out more about what insurance you need and how to go about applying in a FREE Strategy Session.


Disclaimer: Information contained within this article is of a general nature. Do not be rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.