Trauma insurance, also known as critical illness insurance, is a type of insurance policy that provides a lump sum payment to the policyholder in the event that they suffer from a serious medical condition or illness. This type of insurance is designed to provide financial support during a difficult time, by covering medical expenses, living expenses, or other costs associated with the illness. In this article, we will discuss the basics of trauma insurance, how to apply for it, and the scenarios where it can come in handy.
Understanding Trauma Insurance
Trauma insurance provides a lump sum payment to the policyholder in the event they are diagnosed with a serious medical condition or illness. The types of medical conditions or illnesses covered by trauma insurance may vary depending on the insurance provider, but they generally include conditions such as cancer, heart attack, stroke, and major organ failure.
When taking out a trauma insurance policy, it is important to understand the terms and conditions. This includes the types of medical conditions or illnesses that are covered, the waiting period before a claim can be made, and the benefit payment period. The waiting period is the amount of time between when the policy is taken out and when the policyholder can make a claim, while the benefit payment period is the length of time that the policyholder can receive payments.
Application
To apply for trauma insurance, the policyholder will need to contact an insurance provider and provide information about their health and medical history. The insurer may require the policyholder to undergo a medical examination to assess their health and determine eligibility for the policy.
When applying for trauma insurance, it is important to compare policies from different insurance providers to ensure that the policy provides adequate cover and meets the individual’s needs. The cost of the policy will depend on a number of factors, including the level of cover required, the individual’s age, health and lifestyle, and the type of policy chosen.
Scenarios
Trauma insurance can come in handy in a number of scenarios, including the following.
Covering Medical Expenses
Trauma insurance can help cover medical expenses associated with a serious medical condition or illness. This can include costs such as hospital stays, surgery, medication, and rehabilitation.
One situation that can be considered under trauma insurance is a push by the AFL Players Association (AFLPA) to have it as part of compensation for AFL and AFLW players. In Senate hearings in April 2023, AFLPA CEO Paul Marsh said the organisation was studying funding sources for a trauma policy, whether it will be deducted from player salaries or the player pays out of pocket. The push for trauma insurance came after the West Coast Eagles announced a new partnership with Zurich Insurance to provide personal trauma coverage to 14 players and combat the danger of concussions. Eagles CEO Trevor Nisbett also briefed Marsh on how the team did the policy.
Replacing Lost Income
If the policyholder is unable to work due to their illness or medical condition, trauma insurance can provide a lump sum payment to help replace lost income and cover living expenses.
Providing Financial Support
Trauma insurance can provide financial support to the policyholder and their family during a difficult time, by covering the costs associated with the illness or medical condition.
Funding Lifestyle Changes
Trauma insurance can also provide a lump sum payment that can be used to fund lifestyle changes, such as modifications to the home or changes to the individual’s employment.
Revised Strategies
With the recent COVID19 pandemic, many Australians have been reevaluating their financial plans and insurance policies. The pandemic highlighted the importance of having adequate insurance coverage, including trauma insurance, to protect against unexpected medical events. As a result, insurance providers are revising their strategies for trauma insurance, with a focus on providing greater flexibility and affordability.
One of the most notable changes in trauma insurance policies is the inclusion of COVID19 as a covered medical condition. Many insurance providers recognised the impact the virus can have on individuals and their families, and have updated policies to provide coverage for COVID19-related illnesses. This means that individuals who contract COVID-19 and suffer from serious side effects may be eligible to file claims under their trauma insurance policy.
In April 2020, one notable Australian insurer was able to process claims of two people who contracted severe COVID19, putting them in the hospital ICU for 30 days and have since recovered. The company has since assisted over 1,300 people who had financial hardships as result of the lockdown and loss of work.
Another important change in trauma insurance policies is the availability of “stepped” and “level” premiums. According to the government’s MoneySmart portal, Stepped premiums are calculated based on the policyholder’s age and increase each year as the policyholder gets older. Level premiums, on the other hand, remain the same throughout the policyholder’s life. This provides greater certainty and stability for policyholders, who can plan their finances more effectively knowing that their premiums will not increase as they age.
In addition to revised premium structures, insurance providers are also offering greater flexibility in the type of cover that is available. Some providers offer “trauma-only” policies, which provide coverage specifically for critical illnesses such as cancer, heart attack, and stroke. Others offer “trauma and life” policies, which combine trauma insurance with life insurance to provide a more comprehensive level of coverage.
Tips for Taking Out Trauma Insurance
When applying for trauma insurance policy cover, there are a number of factors to account for. Here are some tips to help you get started:
- Determine the type of cover you need. Consider the types of medical conditions or illnesses that you are most concerned about and choose a policy that provides coverage for those conditions.
- Compare policies. Compare policies from different insurance providers to ensure that you are getting the best possible coverage at an affordable price.
- Terms and conditions apply. Read the fine print and make sure that you understand the waiting period, benefit payment period, and any exclusions or limitations of the policy.
- Consider the premium structure. Choose a premium structure that works for you, whether that’s a stepped premium, a level premium, or a combination of the two.
- Review your policy regularly. As your life evolves, your insurance requirements may also shift. It’s important to regularly reassess your policy to confirm that it aligns with your current needs and offers sufficient coverage.
Dealing with the Trauma
Trauma insurance can provide valuable financial support during a difficult time, but it is important to choose the right policy and understand the terms and conditions of the policy. With revised strategies for trauma insurance, greater flexibility in the type of available cover, and a focus on affordability and accessibility, Australians can be better prepared for unexpected medical events. By taking the time to research and compare policies, individuals can find a trauma insurance policy that meets their needs and provides peace of mind for them and their families.
DISCLAIMER: This article is for informational purposes only and is not meant to replace or supersede official insurance advice. 2 Ezi has no working relationships with any insurer or sports organisation mentioned in this article. Please consult your insurer for trauma policy solutions.
