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Is trauma insurance is worth considering?

clock icon August 14, 2017
tag iconInsurance & Income Protection

It’s one of the most underused policies, but trauma insurance is worth considering.

Doing so could take a lot of the pressure off if you find yourself unable to work.

Trauma insurance cover is a tax-free lump sum that is paid out upon diagnosis of a serious illness. Generally speaking, there is a list of about 35 illnesses that are covered, including cancer, heart attack and stroke.

The idea is the lump sum is used to pay for expenses that aren’t covered by health insurance as well as extra time off work for recovery as this can be a very stressful time.

The cost of a serious illness

Using cancer as a specific example, a new report in JAMA Oncology found one-third of patients that were insured still faced out-of-pocket costs which were greater than they had expected.

Additionally, a report published by the Cancer Council Australia says that although cancer remains a leading cause of death in Australia, survival rates have improved. Meaning more people are living with cancer and the expenses that come with a diagnosis.

“Consequently, the prominence of research into the financial aspects of diagnosis, treatment, and follow-up for individuals and their families has increased dramatically,” the report said.

Where can I purchase trauma cover?

Trauma cover can be purchased from an insurance company, broker or financial planner.

In terms of how much you should be insured for, WLM Financial Services, Sean McGowan told Fairfax Media: “We normally say if someone’s fully insured for income protection, we factor in $100,000 for diagnosis and treatment and $100,000 for replacement income.”

Do you need trauma cover?

Not everyone needs trauma cover. Before taking out a policy, sit down and assess what other insurance policies you already have, such as income protection or private health insurance.

It’s also a good idea to work out how much money you would need to live if you were diagnosed with a serious illness. The lump sum payment can be especially beneficial to stay-at-home parents who aren’t earning an income.

Speak to a qualified Financial Planner and see if trauma insurance is right for you.

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