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  • Writer's pictureCOMPASS

Trauma insurance

Trauma insurance, also known as critical illness cover, provides a lump sum of money if you suffer from a specific illness. It covers you for major events such as blindness, cancer, kidney failure and multiple sclerosis. It is different to total and permanent disability cover because you don’t have to be totally and permanently disabled to make a claim.

Why is trauma insurance important?

Trauma insurance can protect you if you suffer from a major medical event. If you are diagnosed with an illness such as cancer, you may require time off work and be treated by the best available doctors, which can come at a huge financial cost.

Wouldn’t it be nice to have access to a lump sum of money to replace income if you are unable to work, to help cover medical expenses or to allow you time to recover and be with your family?

Even if you have income protection insurance, it is still important to insure yourself for trauma insurance as income protection generally only pays up to 75% of your current income. Also, you may need extra money to help pay large medical bills or other expenses.

Can it happen to you?

Don’t think it can’t happen to you? Look at the statistics on just one area of illness – cancer.

An estimated 130,466 new cases of cancer will be diagnosed in Australia in 2016. One in two males and one in three females will be diagnosed with cancer by the age of 85. The most common cancers in Australia (excluding non-melanoma skin cancer) are prostate, colorectal (bowel), breast, melanoma and lung cancer.

Source: Cancer Australia statistics

What about trauma insurance for children?

Trauma insurance should also be considered for children once they reach age two. If your child suffers a major illness or injury, either you or your partner will most likely want to take time off work to be with and care for your sick child.

Your child may require surgery, hospitalisation and further ongoing treatment. These expenses can mount up and you may be earning less income if you can’t work.

Without covering a child for trauma insurance your entire family may be subject to financial difficulties. How would you continue to pay your mortgage repayments and other expenses such as schooling, power bills and groceries if you are no longer working?

Trauma insurance can only be added to an adult’s policy, so if you have trauma cover for yourself you can also add your children to the policy. The cost of child trauma cover is usually very affordable.

What action should you take?

Although the chances of contracting cancer are relatively high, the good news is that the chance of surviving at least 5 years is 87%. But during this time you may face significant additional costs and disruption to your financial plans. Similar stories apply for other illnesses. Insurance has a role to play to reduce the worry caused by financial difficulties.

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