Trauma insurance provides a lump-sum payment if you’re diagnosed with a serious illness or suffer a major health event. The idea is simple – it gives you financial breathing room so you can focus on recovery, not bills.
Unlike Life Insurance or Total and Permanent Disability (TPD) Insurance, trauma cover is designed for when you survive a serious event but need time and resources to recover. It can be used to pay for medical costs, cover your mortgage, replace lost income, or even make lifestyle adjustments like home modifications.
What does Trauma Insurance cover?
Policies vary, but trauma insurance usually covers major health conditions such as:
- Heart attack or stroke
- Cancer (specific types and stages)
- Major surgery or organ failure
- Paralysis or loss of limbs
- Severe burns or neurological conditions (like multiple sclerosis or Parkinson’s disease)
Each insurer sets out the exact definitions in their Product Disclosure Statement (PDS), so it’s important to check what is included.
How does it help in practice?
Imagine being unable to work for months while you recover from a stroke or cancer treatment. Trauma insurance provides a lump-sum payment you can use however you need – whether that’s covering mortgage repayments, funding specialist care, hiring short-term help at home, or simply giving you peace of mind that you won’t need to drain your savings.
Things to keep in mind
- Not held inside superannuation: Trauma insurance cannot be taken out or funded through your super. It needs to be held separately.
- Cover levels vary: Some people choose a smaller amount for medical costs only, while others opt for enough to clear debts and replace income for a period.
- Part of a broader plan: Trauma insurance often works best alongside Life, TPD and Income Protection cover, giving you a safety net for different situations.
Things you might also consider
When choosing trauma cover, it’s worth thinking about:
- Standalone or linked cover: Trauma can be a separate policy, or linked with Life or TPD cover. Linked policies are often cheaper but a payout on one benefit can reduce the others.
- Policy depth: Premium-style policies usually cover more conditions and may include partial payments for earlier-stage illnesses or less severe conditions.
- Income needs: How long would you need to replace your income if you couldn’t work? Trauma can help fill that gap.
- Debt relief: Some people set cover at a level that clears their mortgage or short-term debts to ease pressure during recovery.
- Medical costs: Consider cover that could fund specialist treatment, rehabilitation, or help with Medicare and private health insurance gaps.
