What is trauma insurance? What does it cover?

Summary

  • Trauma insurance is useful in cases where an individual is unable to work due to a serious injury or an illness. The insurance pays out a lump sum amount to the policyholder under these circumstances.
  • The insurance covers critical illnesses, including coronary heart disease, heart attacks, stroke, and cancer. It also covers severe head injury, although it excludes mental health conditions.
  • Trauma insurance differs from income protection insurance or TPD insurance in that it provides short-term monetary buffer while the other policies offer long term cover.

Medical emergencies can strike at any time, and considering how huge the related costs may be, it is prudent to keep one insured.  While health insurance plans are beneficial, they do not provide lump-sum payments that might be critical at times when the regular flow of income stops.

Trauma Insurance, as the term suggests, is a plan that can help you with all your medical emergency related costs if you are suffering from a severe disease or have had a major injury. The insurance cover helps you rehabilitate and recover quickly without having to worry about the financial strain it might put on you. Besides, it can also help you and your family maintain and afford the same kind of lifestyle even after an unfortunate event. Not having to worry about paying rents or buying groceries is pivotal in being able to bring your life back to normal to the extent possible.

Image Source: © Kalkine Group 2020

Trauma insurance can help manage the following expenses in case of medical exigencies:

  • Cost of living, in case you are not able to work and the regular income has stalled
  • Medical expenses, bills and hospital, costs for rehabilitation after critical injury or illness
  • Mortgage payments in case you have pending payments to make
  • Rehabilitation therapies or ongoing nursing care costs
  • Modifications to your vehicle to make it more user friendly after the accident/illness

GOOD READ: Basics of Health Insurance: Here is what you should know

What are the conditions covered in trauma insurance?

Trauma insurance covers a broad range of diseases and conditions including accident-related injuries, heart disease/heart attacks, stroke, burns, loss of speech or hearing, paralysis or loss of a limb, head trauma, meningitis, HIV(medically contracted), different types of cancer, Alzheimer’s, organ damage or transplants, Parkinson’s disease, multiple sclerosis, and arthritis, among others. While the list is not exhaustive, the insurance covers all the common conditions.

The Heart Foundation states that heart attacks are the most common reason for deaths in Australia. Dementia and Alzheimer’s are also diseases that can cause a severe inability to work and lead a normal life. In all, most conditions that may harm you are covered in trauma cover.

One must refer to the Product Disclosure Statement (PDS) before finalizing on a policy and understand what best suits their requirements.

You also need to determine what are the illnesses/ conditions that require out-of-pocket payments because they are not included in your trauma cover. In this case, you might also need to get private health insurance.

Is there a COVID-19 cover as a part of trauma insurance?

If unfortunately, a person dies due to COVID-19, his/her will not be covered by trauma insurance, under the current scenario. However, if the COVID-19 contraction leads to any of the complications listed above, one might be able to make a claim for the same under trauma insurance. Insurers are currently trying to find a way to streamline this and make trauma insurance useful for COVID-19 positive individuals in the future.

 Choosing the right trauma insurance plan to cover all emergency expenses in unforeseen conditions goes a long way in ensuring peace of mind in the long run.

INTERESTING READ: Is the pandemic hitting your pockets? A look at health insurance firms’ COVID-19 relief packages                                                                                                                

How to determine if you need a trauma cover?

Often one is confused whether a particular kind of insurance may be the best thing for them. When deciding on a trauma cover, here are a couple of basic questions you must ask yourself:

  • In an unfortunate even, will I be able to afford unforeseen medical costs that might need to be paid out of pocket? In case of surgeries or need for intensive care, would my regular health insurance cover those costs?
  • If my income abruptly stopped, will I be able to keep making continuous mortgage payments?
  • What other instalments do I have to pay regularly, and will I be able to afford them? Car Loans, student loans etc.?
  • What do my savings look like and how financially secure am I right now?
  • If I am suddenly incapacitated, am I eligible for worker’s compensation or other government benefits?

Average cost of trauma insurance

One’s family history of illness, as well as one’s own health-affecting habits such as smoking/drinking, play a role in determining the premium you must pay. Other factors include one’s age and occupation, the required coverage, and the kind of premium one chooses; Level premium or Stepped up Premium.

While each case is different and depends mainly on the data mentioned above; the average cost of trauma cover for a middle-aged male could be in the range A$86-87 per month. It tends to be slightly lower for women.

Once you decide to take the trauma cover, you must compare all possible options before you make the call. There are different kinds of comparisons available that will help you choose the one that best suits your requirements.

You may also speak to a representative who can give you a real-time analysis of all your options and help you make an informed choice regarding your trauma cover.

ALSO READ: Why is family health insurance important? What to consider while choosing one?  

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