Did you know that three in every four Australians will be diagnosed with a serious illness during their working life? In fact, one in three men and one in four women will suffer from cancer in their lifetime and half of those will live more than five years after diagnosis. Women have a one in four chance of suffering a critical illness between the ages of 30 and 64 as well as a one in four chance of developing cancer before the age of 75. Not great odds if your family depends on your income to meet the day-to-day bills and service any debts.
Have you considered how your family will cope financially with the diagnosis, the treatment and life after that?
Trauma or Critical Illness insurance provides a lump sum cash payment on the diagnosis of a covered medical condition. This payment is designed to help pay for the medical bills, mortgage and general living expenses until you get back on your feet.
The difference between trauma and income protection insurance
While both trauma insurance and income protection insurance offers benefits to people who are still alive, as opposed to funeral insurance and life insurance, there are significant differences to help deal with financial obligations arising from the incapacity to work and critical illness.
Covers critical illness suffered by the insured person upon diagnosis.. Once accepted, a benefit is paid in lump sum for most cases and you may still be able to work but also claim as long as they are diagnosed with the illness covered by the policy.
Income Protection Insurance
Income protection insurance, on the other hand, covers insured people who have lost the ability to work temporarily or permanently due to an illness or accidental injury. It protects the need to continue maintaining your financial obligations for the period of time you cannot work. The benefit is paid monthly and the payments cease once you are well enough to return to work.
While the most common claims are for cancer, heart attack, coronary bypass and stroke, the medical conditions varies widely from policy to policy.
What illnesses trauma insurance can cover?
Who should consider trauma insurance?
Anyone that has a predisposition to suffering the diseases covered in a basic trauma policy as well as anyone who wants to secure their financial stability and protect their lifestyle from being adversely affected by a critical disease. It is particularly important for young professionals (with large mortgages and young families) and older people who may be more prone to suffering from critical diseases as they age.
As with all forms of insurance, the definition of trauma insurance will vary from policy to policy, so it is essential you read the PDS and seek expert advice. The lump sum benefit received upon a successful claim is there to assist you and your loved ones pay for specialist medical care, necessary modifications to the home, ongoing monthly bills such as the mortgage or school fees as well as provide a buffer should you require their partner to take time off to care for you while you are recovering.
You have the option of bundling your trauma insurance with your life insurance benefit. While this option will reduce the costs associated with purchasing two stand-alone policies it only pays out for either the life insurance or a trauma insurance event. Opting to purchase the buy-back option on a trauma insurance policy allows you to re-purchase the death cover component once there has been a full trauma insurance payout. This provides the policy holder with additional protection should they need to make more than just the one claim in the future.
You may think that all Trauma Insurance policies are equal and that once you’re insured you’ll be covered no matter what, but in reality, there are many different features and levels to choose from. It’s unwise to assume that all policies offer you the same benefits and level of cover. Talk to Doran Financial Services today for expert advice on the best policy to suit your personal circumstances.