What would trauma cost you?

February 2018

By Jamie Laird, Private Client Adviser, UniSuper Advice

Trauma insurance cover could protect you from upfront expenses involved with a traumatic health event.

Could you continue to work and support yourself, or your family, if the unexpected occurred?

Trauma cover—often overlooked—is a type of insurance which pays a lump-sum benefit in the event you suffer from a defined health event like cancer, stroke or heart attack.

Unlike death, total and permanent disablement (TPD) and income protection cover, super funds can’t offer trauma cover. But it can be purchased from some insurers, or via financial advisers who can act as brokers and find you the best rated policy.

Trauma cover payments can cover things like out-of-pocket medical expenses, physical therapy or other expenses arising from a change in lifestyle following a traumatic health event.

Unlike income protection cover held outside of super, trauma cover isn’t tax deductible.

Like all insurances, there’s a lot to consider when deciding on the most appropriate type or level of cover.

Assess the type and level of any existing cover you may already have, like health insurance, income protection and/or TPD cover.

And remember—these insurances all cover different things.

Income protection pays a regular income of up to 85% of your income (usually your income at the time of claim), but generally won’t pay for other expenses arising from a traumatic health event. TPD pays a lump-sum benefit if you’re permanently unable to work.

Health insurance is provided as ‘hospital’ and ‘extras’ cover, and reimburses expenses like hospital admissions, or ancillary health services like dental, optical and physiotherapy.

Be sure to consider the finer details of your existing insurance arrangements.

For example, income protection payments are usually subject to a 30, 60 or 90-day waiting period, and health insurance can have different levels of excess charges, gap payments and exclusions.

Trauma cover policies include a defined list of medical conditions which they will and won’t cover, so it’s really important you know what you’re covered for.

There’s also the choice of ‘level’ or ‘stepped’ premiums. Level premiums stay the same over time (adjusted in line with inflation), but are generally more expensive when you’re younger. Stepped premiums are generally cheaper when you’re younger, but the cost increases over time.

You can also choose to have your benefit increase over time automatically—typically in line with inflation.

Need help? Our financial advisers can help assess the most appropriate cover for you, in line with your broader financial and personal situation. Call 1800 UADVICE (1800 823 842) to learn more.