Preparing for Major Illness – Trauma Insurance Explained

You have probably heard of life insurance, income protection insurance, and permanent disability (or total permanent disability) insurance. But a relatively new brand of personal insurance is trauma insurance. If you haven’t heard of it before, this article aims to outline how it works and if it’s right for you.

What is Trauma Insurance?

Trauma insurance pays you a lump sum – similar to life insurance – if you are diagnosed with a major illness. Definitely not an inexpensive type of insurance, it however occupies an important and relevant position in the personal insurances, if you will.

Imagine that you are diagnosed with cancer and cannot work for a couple of years. Certainly your life insurance would not pay, and your total permanent disability would not as well (it would end in many cases when you return to work). Income protection insurance is not designed for the long-term, as many policies are for two to three years, and as little as six months.

Either way you put it, you will most likely not receive the money that is needed for a critical/serious illness. This is where trauma insurance comes in, offering a lump sum that is tailored to the specific condition.

How Does It Work – And What Is Covered?

Trauma insurance works in the same way as life insurance. Once a specified illness/condition is diagnosed, a lump sum will be provided relative to the actual condition; this number is outlined in the policy, along with a total limit. Other qualifications can be applied; for instance, one company notes that the individual must be diagnosed and then survive for 14 days) to qualify.

The number of conditions that are covered is prolific in number, as you might expect. It is common to see 45-50 conditions listed. Here are some common examples:

o Heart Disorders, including different surgeries and heart attack
o Blood Disorders, such as HIV and advanced diabetes
o Nervous System Disorders, such as stroke, major head trauma, Alzheimer’s Disease, and coma
o Body Organ Disorders, including different types of cancers, organ/bone transplant, severe burns, and loss of speech/hearing
o Other Events, including “serious injury,” “critical care,” and loss of sight/limbs
o Additional Options, such as partial blindness/loss of hearing, diabetes complications, carcinoma of the cervix/vulva, and melanoma

Note that this is just a few examples of what may be covered. You will likely see a number of additional options to enhance your coverage. For instance, you can obtain a benefit to help your family accommodation if you are away from home, or an option to cover your child in the event of some of these conditions.

Considering Trauma Insurance

While your health insurance, and possibly other personal insurances, could help in the event of these conditions, it may not be enough. The financial strain that accompanies a serious condition, disease, or other event is great in magnitude.

Take a look at your situation, including your finances and insurance coverage, to gauge if trauma insurance is needed and if so, how much? While this is not an inexpensive type of insurance, it may simply be a safe and smart option.

If you consider this type of insurance, make sure you look at the various coverage offered, conditions that are covered, and the many types of options and benefits. While these can be complicated, the insurance itself works in quite a simple manner.