Do I Need Trauma insurance?
The choice of cover depends entirely on an individual’s circumstances.
Trauma Insurance was first introduced into Australia in 1986. If you have heavy debts and are at pre-retirement age this cover may be important. A Critical illness can be just as damaging to family finances as a death and more so if medical bills result from a long lasting illness.
While recovery is certainly possible from the illnesses covered by trauma insurance, in most cases to qualify for a benefit the condition needs to be severe. Also if you suffer from a condition which is not specified you will not be covered.
Can I Still Claim On My Life Insurance After A Trauma Claim?
Some trauma policies also include a Death benefit, which will have the same pay out value as the trauma benefit. In this case, obviously, only ONE pay out will be made – either on a trauma or on death. There may be savings available in buying life cover as part of a trauma package rather than as a stand alone policy. When packaging benefits in this way you should be aware that a claim on trauma or TPD will reduce the underlying life cover unless a buy back option is purchased.
Normally only ONE trauma benefit is ever payable to an individual under a policy – after a pay out you may become uninsurable and no longer able to buy Life Insurance, Total and Permanent Disability, Trauma or Income Protection Insurance cover from any insurer. So it is important to either purchase a buy back option or have sufficient cover to enable you to live out your remaining life on the proceeds of the claim. Buy back options are offered on some policies for an extra cost. If you purchase the option, you may, after a qualifying period of the benefit payment, re-purchase the death cover component.
What illnesses Are most Commonly Claimed On?
When looking for a trauma policy, you will be confronted with a variety of conditions covered by the policy. However four of these conditions account for the great majority of claims. Recent claims experience from one insurance company showed the cause of claims to be about 62% for cancer, 13%for heart attacks, 11% for coronary artery disease and bypass surgery, 9% for strokes and the remaining 5% spread amongst the other conditions. Therefore the definitions of these top four conditions within the policy should be carefully scrutinized. While increasing the number of conditions covered increases the likelihood of an illness being covered by the policy, the additional conditions will usually come at the cost of an increased premium.
How Much Does Trauma Insurance Cost?
It is impossible to gauge exactly how much Trauma insurance will cost you as there are many variables that effect the premium.
The main items that effect your premium are;
- The amount of cover
- Family history