Trauma & Critical Illness

When you take out trauma insurance, your insurer will provide a lump sum payment if you are diagnosed with a specified illness or injury that significantly impacts your life, such as a heart attack, stroke or cancer. An unexpected diagnosis of a serious illness or an injury can hinder your ability to work and provide for yourself and your family. The lump sum payment from a trauma insurance claim can offer substantial peace of mind during such challenging times. This set amount can be used for medical bills not covered by your health insurance, debt repayments, transportation costs, additional care needs, and everyday expenses. Always carefully read your Product Disclosure Statement before purchasing trauma insurance to ensure you understand which illnesses and injuries are covered, as this will vary between insurers.

Most providers include more than fifty conditions in their trauma insurance policies. While the specifics can vary among insurers, the following illnesses are typically considered traumatic and are often covered:

- Heart attack/Heart disease
- Stroke
- Most types of cancer
- Neurological diseases, including Alzheimer's Disease Severe anxiety and depression
- Major organ damage/transplant
- Multiple Sclerosis or Parkinson's Disease
- Severe diabetes
- Medically acquired HIV
- Meningitis or meningococcal disease
- Loss or paralysis of a limb
- Severe arthritis
- Deafness or loss of speech
- Major head trauma
- Major burns Injuries from major accidents

Although this list might seem limited, these conditions are quite common. According to the Heart Foundation, heart disease is the leading cause of death in Australia, and one in two Australians will be diagnosed with cancer at some point in their lives. Additionally, cerebrovascular diseases, such as strokes, and conditions like Alzheimer's and dementia can severely impact your ability to work.
While it’s not pleasant to consider, trauma insurance covers the conditions most likely to cause sudden incapacity or death. It’s crucial to read the Product Disclosure Statement (PDS) when researching policies to understand exactly what is covered and to determine whether a provider is right for you.

It's a common question and can be confusing, so let's break down the different types of insurance.
Trauma insurance is primarily designed to offer a short-term cash buffer if you need to take time off due to a serious injury or medical condition. It provides a single lump sum payment intended for immediate financial relief. This lump sum can help cover your mortgage or support your family while you’re ill, alleviating immediate financial stress.
Income protection insurance provides regular payments, typically up to 70% of your income, for a set period while you're temporarily unable to work. It offers longer-term financial support but can take longer to pay out.
Total and permanent disability (TPD) insurance offers ongoing payments if your illness or injury prevents you from ever returning to work. It covers many of the same conditions as trauma insurance but is focused on long-term financial needs.
In summary, trauma insurance offers immediate financial relief through a lump sum payment, while income protection and TPD insurance provide longer-term financial support through ongoing payments. It’s common for people to bundle multiple life insurance policies together.

For example, if you're covered by both trauma and income protection insurance, you can use income protection to cover day-to-day living expenses while the trauma payout may be used to cover any gaps in medical expenses or to allow your partner to take unpaid leave from work.

When taking out trauma insurance, you should consider a coverage level that compensates for any lost income while you recover. To estimate the amount you need, think about how you would cover the following expenses without your regular income if you couldn’t work: Mortgage repayments Credit card debt School fees Medical expenses Household bills