Trauma insurance (or critical care, serious care insurance depending on your provider) is part of the suite of personal insurances that Moneyworks recommends to our clients. We have used trauma insurance since day one (14/02/1997) and have seen our clients receive many payouts, mainly for heart and cancer related conditions.
Trauma insurance is a 'living insurance', like income protection insurance, which pays out while you are alive. Life insurance covers expenses and provides for your loved one if you die, but trauma insurance is designed to give you a lump sum payment when you are diagnosed with one of the identified illness or injury conditions.
You can then do what you want with those funds. You choose the lump sum that you are insured for (most of our clients are insured for between $50,000 and $350,000 depending on their situation).
When Partners Life entered the insurance scene in 2011, they introduced significant changes to the wordings on all their insurance policies and shook up the industry in a good way. As a consequence of their broader and more up to date insurance wordings, over time, the other insurers have updated their trauma insurance wordings for new policies.
More significantly however, all insurers that we have dealt with then applied those new wordings as 'pass-back wordings' to older policies.
What this means is that some people who may not have been able to get a full claim under the old wordings are now able to claim on their policies. However, there is a catch, they can't have been diagnosed with the condition prior to the wording changes.
In recent times we have assisted a client with trauma insurance claim - a 62 year old male with a sudden aortic dissection and have another possible claim pending at present, depending on the outcome of medical treatment.
As you accumulate your wealth and build up enough funds to see you through retirement, your need for these types of insurances changes, so it is important that you are regularly reviewing the level of your cover with your adviser, in the context of your other financial planning achievements.
One final note, trauma insurance cover is quite different to health insurance cover. Health (or medical insurance) pays medical costs that are approved on the policy.
Trauma insurance provides a lump sum payment if you are diagnosed with an identified illness or injury (eg Cancer, Stroke, Quadriplegia, Severe Burns and up to 35 other identified conditions.)
As a result of the regulatory and compliance requirements, Moneyworks now only provides advice on two insurers products - Partners Life and Resolution Life (ex AMP) - which is closed to new clients.
Partners Life have just upgraded their trauma offering making their buy back option (if you get a trauma payout and have the buy back option, you can get trauma cover again for un-related conditions). People with the existing buy back option now have an immediate and automatic buy back option (other companies, and also previously with this benefit - have a 12 month stand down period before trauma cover is reinstated.). Partners policies permit this cover to bought back four times, so that up to four times the original sum insured is available to clients.
In addition, as you get older, you may still need trauma insurance, but only for the really big trauma's. We can tailor your policy over time so that you can have a mix of the comprehensive trauma, moderate trauma and severe trauma. The definitions become more limited along that spectrum, but the cost for trauma decreases. As your assets build up over time, this is a good option - discuss it with your adviser.