When serious illness strikes, life can change overnight. Trauma Insurance (also called Critical Illness Cover) provides a lump-sum payment if you’re diagnosed with a serious medical condition such as cancer, heart attack or stroke.
It’s designed to give you breathing room – so you can focus on recovery, not bills.
Unlike Life or TPD cover, Trauma insurance is all about living through a serious event and having the flexibility to manage treatment, time off work, or extra help when you need it most.
Why People Take Out Trauma Insurance
Most people don’t think about how they’d cope financially during recovery from a major illness. But treatment, rehabilitation and time away from work can all add up quickly.
Here are a few ways Trauma cover can help:
- Replace lost income while you take time off to recover.
- Cover out-of-pocket medical or rehabilitation costs not fully paid by Medicare or private health insurance.
- Reduce financial stress by paying off short-term debts or covering household bills.
- Fund home adjustments or accessibility changes if your health needs shift.
- Provide flexibility – whether that means choosing your doctor, exploring new treatments, or giving your partner time off work to help.
Trauma cover is, at its core, about choice and control during recovery.
Real-World Perspective
Serious illnesses are more common than many realise.
- Over 1 million Australians are living after a cancer diagnosis¹.
- About 40% of cancer diagnoses occur in people of working age¹.
- The average time off work for cancer treatment and recovery is around 30 weeks¹ – at a typical professional income of $5,000 a week, that’s $150,000 in lost earnings.
- Around one-in-four patients faces out-of-pocket medical costs above $10,000 every two years¹, and some treatments can exceed $100,000 when not subsidised.
That’s why your adviser will often encourage planning for a mix of recovery costs, debt relief, and contingency funds – because every person’s recovery looks different.
How Much Cover Do You Need?
There’s no one “right” amount. The right level of Trauma cover depends on your lifestyle, income, and what support you’d want if you couldn’t work for a while.
A simple way to think about it is to cover:
- Income replacement for a period of recovery – commonly 3 to 12 months.
- Medical or contingency costs – treatment, rehabilitation, and travel.
- Extra income support – a few months of a partner’s income if they take time off to help.
- Debt clearance – smaller debts or credit cards that would otherwise add stress.
Some people prefer a single combined allowance that blends these elements, giving flexibility for whatever their recovery demands.
Example Worksheet
| Area | Include? | Allowance ($) |
|---|---|---|
| Medical / Contingency | ☐ | $ |
| Income Replacement | ☐ | $ _____ /month for _____ months |
| Extra Income Support | ☐ | $ _____ /month for _____ months |
| Short-term Debt | ☐ | $ |
| Home Modifications / Aids | ☐ | $ |
| Other | ☐ | $ |
| Estimated Total Cover | $ |
Bringing It Together
You don’t have to do this alone. Your adviser can help tailor your Trauma cover to your existing Life, TPD or Income Protection policies, so everything works together without duplication.
But even on your own, taking time to think through the areas above can help you find a realistic and comfortable level of protection.
Planning for the unexpected isn’t about expecting the worst – it’s about buying time to recover well and maintaining the choices that matter most to you and your family.
References
¹ Figures from PPS Mutual, Reducing the Trauma – The personal cost of critical health conditions today (2023).
Private treatment costs can vary significantly depending on diagnosis, treatment type, and whether care is public or private. Figures are indicative only.
General Information
This article and table are intended as a general guide to help you think about potential Trauma cover needs. Individual circumstances, health conditions, and costs vary widely, and any estimates should be used as discussion starters rather than advice.
Always check your insurer’s Product Disclosure Statement (PDS) for definitions, conditions, and exclusions, and speak with your adviser for guidance tailored to your situation.
