Trauma Insurance or Critical Illness insurance provides you with a lump sum on the diagnosis (or occurrence) of one of the serious medical conditions covered by the policy. It is designed to help you financially so that you can take time out to focus on your recovery.
What does it do?
Someone in your family, or friends, or someone you know has suffered from a heart problem, cancer scare or one of any number of major medical problems. They need time, time for treatment, time to recover and time to get their life back together. Trauma cover is designed to give them this time, it provides the financial backstop so that you don’t have to worry financially if this happens to you.
What is the Benefit?
Trauma or Critical illness insurance is designed to give you time should you suffer a major trauma. It allows for a lump sum payment of the sum insured on diagnosis of any of the listed trauma events on your policy. The benefit is not taxable in most cases, and is designed to help cover medical treatment costs, income replacement during rehabilitation and modifications to your home or lifestyle that may be needed. Most policies now cover between 5 and 50 defined trauma events, and some even pay a partial benefit on less serious procedures.
How much Trauma cover to I need?
It would be almost impossible to exactly determine what cover is required for trauma as everyone’s circumstances are different, treatment costs vary and your ideas on recovery time could be different to someone else’s. The best way to arrive at the sum insured is to work through different scenarios with your adviser until you feel comfortable that you will be adequately financially supported should you suffer a trauma covered by the policy.
How does the policy work?
The basic idea of a trauma policy is to pay a lump sum benefit to the life insured upon diagnosis of one of the listed trauma events. Sounds simple enough, however this like income protection is an potentially complex cover that offers a wide range of standard benefits and options. Listed events range from 5-50 depending on the insurer and all of these insurers offer similar but vastly different benefits. Some benefits include options to reinstate the claimed amount as death cover after a period of time and some companies now offer to reinstate the entire trauma policy, with some exclusions. Again, carefully consider the benefits and available options and discuss them with your adviser.
Where to from here?
Following discussions with your adviser, they will make written recommendations outlining the policies and sum insured that will meet your current circumstances. A personal medical statement is normally all that is required to have the application process started, however, sometimes depending on your medical history, blood tests or a medical appointment may be required. From there, your adviser will liaise with you through to the insurer issuing your policy documents.
What happens if a claim is made?
In the event a claim is made, your adviser will try and make the process as simple as possible for you. Claim forms will need to be completed, identification documents, medical records and doctor’s report will need to be obtained and your adviser will help with this and liaise with the insurer. The insurer has a dedicated claims team, and a claims assessor will be allocated to help you through this process.