What is Trauma Insurance

By Simon Smith

Trauma insurance is receiving a lot of interest these days because baby boomers are becoming more and more aware of the statistical chances of them having a major medical condition, and the associated medical costs of their treatment and rehabilitation.

Trauma insurance is a "living" life insurance policy. It is called "living" because the insured person - you, is usually still alive when making a claim against it. Trauma insurance is also known as "Critical Illness" cover. 

Why Consider Trauma Insurance

Trauma Insurance is a simple yet highly effective financial tool which you can use to protect yourself and your dependents from the potentially devastating effects of a major medical trauma. 

With today's medical advances, many people are surviving serious illnesses and accidents.

Generally speaking if a personal suffers from a medical trauma, life insurance won’t be able to help, as the insured person is still alive. [Unless you qualify for terminal illness benefits]. This is why trauma insurance is so important to your overall plan. 

Trauma insurance is by nature a "diagnosis" cover as such you are more likely to make a claim against this form of insurance than any other life product. Simply put if your diagnosis falls within the parameters of your chosen product definition your claim is more likely to be successful.

Claims are typically paid out very quickly. Provided your diagnosis falls within the parameters of your chosen product definition a claim is payable regardless of whether or not a diagnosed condition prevents the life insured from working or the insured survives. The usual time frame for a claim to be processed is no more than 3 weeks. Because of this trauma policies are more expensive than other types of insurance.

Medical Definitions Include

Here are some of the more common medical condition for which you are able to get trauma insurance for:  Heart Attack Cancer Blindness Quadriplegia Serious Injury Loss of Limbs Loss of Sight Stroke Deafness Major head trauma Coma Motor Neurone Disease Chronic Liver Disease Hemiplegia Heart valve surgery Major organ transplant Open Heart Surgery Loss of Speach. Each of these conditions will have have a specific medical definition which has to be met before the claim is accepted. These definitions can vary greatly from policy to policy, so it vitally important that you don't purchase your trauma insurance purely on price. 

Like all insurance policies  the premiums for trauma insurance will depend on several factors, including the dollar amount on the policy and the number of events or diseases covered by the policy. And the usual pre existing conditions, family history, pastimes, smoking status. Occupation will only become a consideration if total and permanent disability (TPD) is included as a benefit. The premiums for trauma insurance are not a tax deductible expense.

Why Your Claim May Not Be Paid

These are the two most common reasons why your claim maybe disputed or knocked back.

1/. Approximately 3% of all claims submitted are found to be fraudulent. This can be easily avoided by ensuring you include all pre existing ailments on you application.

2/. Claims made in the first ninety days. In most cases "accidental" and some types of traumas conditions are covered immediately on policy issue. However for certain illnesses such as:- heart attack, bypass, certain cancers insurers impose a waiting period. This is usually first 90 days after the policy is accepted.

Conclusion

Developing a quality financial plan involves managing risks that are beyond our control, including the risk of a medical trauma, which can involve treatment costs, recovery costs and disruption of your capacity to save. So whether you're an employee, employer or self-employed, Trauma Insurance is an important component of your personal financial plan.

In the event of a death, accident or illness, having a trauma policy could mean the difference between a you and your dependants not having to sell the family home and assets in order to pay the bills; or as a result of having appropriate cover, affording expert medical treatment and assuring that you and your dependants continue to enjoy the same standard and quality of life.