Trauma insurance in Australia is designed to protect you in the event you are diagnosed with a serious medical condition or disease such as stroke, heart attack or cancer. Trauma insurance is also known as critical illness insurance and pays a lump sum upon medical diagnosis of a condition or disease as defined in an insurer’s product disclosure statement.

How does trauma insurance work?

You are entitled to a trauma cover benefit payment when you meet the definition of a traumatic event as listed in the trauma insurance policy. Depending on the policy, a claim can be made 14 days after surviving a traumatic event; however this time frame varies from company to company. After these conditions are met, you are paid either a lump sum or partial payment depending on the terms and conditions as outlined in your policy, and which traumatic event you experienced.

Types of trauma insurance policies in Australia

Many basic trauma policies offered in Australia are similar, the main difference being the definitions of conditions and diseases, and the types of extra benefits you can purchase. The extra benefits means you can be covered for more conditions and diseases than just the basic ones.

Who should have a trauma insurance policy?

Trauma insurance is a vital part of any risk plan, regardless of whether you are the main breadwinner or not. For example, figures have shown that women are five times more likely to make a trauma insurance claim than a life insurance claim (1). How would your family cope if Mum suffered a traumatic event? Chances are the family would struggle to cope with the additional housekeeping and child caring duties, not to mention medical costs, house hold bills, credit card debt, and mortgage repayments.

Alternatively, if certain conditions or diseases run in your family then trauma cover could help pay for living expenses and medical bills in a time of great stress and financial need.

Medical conditions covered by trauma insurance

There a number of medical conditions and diseases covered by trauma insurance in Australia. The conditions and diseases covered by the policy and their definitions vary between insurers. You must read and understand the meaning of each medical condition, and, what is and is not covered by your trauma policy.

Basic trauma insurance covers:

  • Alzheimer’s disease
  • Angioplasty
  • Aplastic Anaemia
  • Benign Tumour of the Brain or Spinal Cord
  • Blindness
  • Cancer
  • Cardiac arrest
  • Cardiomyopathy
  • Chronic Kidney Failure
  • Chronic Liver Disease
  • Coma
  • Coronary Artery Bypass Surgery
  • Deafness
  • Dementia
  • Diplegia
  • Encephalitis
  • Heart Attack
  • Heart Valve Surgery
  • Hemiplegia
  • Loss of Independence
  • Loss of Limbs or Sight
  • Loss of Speech
  • Major Head Trauma
  • Major Organ Transplant
  • Medical condition requiring life support
  • Medically Acquired HIV
  • Motor Neurone Disease
  • Multiple Sclerosis
  • Muscular Dystrophy
  • Occupationally Acquired HIV
  • Paraplegia
  • Parkinson’s Disease
  • Pneumonectomy
  • Primary Pulmonary Hypertension
  • Quadriplegia
  • Severe Burns
  • Stroke
  • Surgery of the aorta
  • Triple Vessel Coronary Artery Angioplasty

Extra trauma insurance covers:

  • Adult insulin dependent diabetes mellitus
  • Burns of limited extent
  • Carcinoma in situ (CIS)
  • Chronic lymphocytic leukemia
  • Hydrcephalus
  • Malignant melanomas
  • Partial blindness & deafness
  • Prostate tumours
  • Severe endometriosis
  • Systematic lupus erythematosus (SLE) with lupus nephritis

How much does trauma insurance cost?

The cost of cover will depend on a number of factors however an insurer will usually base standard premiums on the following:

  • Age;
  • Smoking status; and
  • Gender

If you already suffer from a medical condition or disease, your insurer may decide to place a loading on your premiums, resulting in higher costs.

If you purchase any additional benefits your premiums will also increase, which may be well worth considering based on the extra conditions, the diseases covered and your family history.

1. MLC Claims Statistics 2008

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