Trauma Insurance is one of the newest types of policies available and is becoming more and more popular as a means of wealth protection. Trauma Insurance, like Life Insurance and TPD Cover, is a lump sum payable; however it is paid on a medically diagnosed event rather than disablement like TPD Cover. There is no disability test that needs to be met; simply the life insured needs to meet the listed medical definition of the event. Trauma Insurance is designed primarily to assist in covering the medical costs of a significant medical event and to provide a level of capital to cover lost incomes. As such lower levels are normally recommended when compared to Life and TPD Insurance.

Trauma Insurance can be linked with Life Insurance and TPD Insurance policies or it can taken alone. When linked with Life Insurance, Trauma Insurance can be cheaper, however when linked and claimed, it can deduct the balance of the linked Life Insurance.

What Trauma Insurance events are covered?

Trauma Insurance policies can offer as little as 5 critical illness events and on average offer around 40 critical events ranging from cancers, heart attacks and strokes to loss of limbs and adult onset diabetes. There are also policies on the market that offer up to 60+ events including partial payments for events that do not meet the requirements for a full payment (e.g. lower cancer grades and single loss of use of limbs). Some common Trauma Insurance policy events include:

• Cancer
• Heart Attack
• Stroke
• Angioplasty
• Organ Transplant
• Severe Rheumatoid Arthritis
• Severe Diabetes
• Loss of Limbs / Eyesight

Trauma Insurance policies vary widely on the market both in number of events covered and also how the level of cover provided and it is important to seek a policy that offers a range of definitions and is also strong in its key events as around 85% of all trauma claims are made up of either Heart Disease or Cancer with around 60% of claims for Cancer related events. Policies are also always being updated to keep up with medical advancements and changes in critical illness treatment options, so it is also important to have a policy that is updated from time to time. Many older closed policies do not have this upgrade feature.

Trauma Insurance has more restrictive entry and expiry ages compared to life insurance, with most policies expiring at either age 65 or age 70. Most trauma insurance policies have the option to revert to a ‘loss of independence’ policy at the expiry age allowing policies to be extended to age 80. Generally, the maximum amount of Trauma Insurance that can be applied for is $2m.

Trauma Insurance is becoming increasing important to consider with increasing rates of critical illnesses and advances in medical technologies, the need for financial security to cover the costs of these events cannot be overlooked. A recent study by the NSW Cancer Council found that the average total direct financial cost of cancer to a family is around $114,500, including loss of income (not only by the person suffering the event, but partners and care givers), medical expenses and rehabilitation. The study also found that the ongoing burden cost of a cancer event can be as high as $800,000! With 1 in 3 males and 1 in 4 females suffering a critical illness before 75 the need for Trauma Cover is becoming increasingly important.

Trauma Policies and underlying definitions can be difficult to compare and advice is paramount to ensure the right policy is obtained.

3 Minute Insurance Quotes compares Trauma Insurance policies from over 12 major Life Insurance companies and all Trauma Insurance quotes are instant, on-screen and anonymous. Start your trauma insurance quotes here.

Total and Permanent Disablement Insurance (known as TPD Insurance) works in a similar fashion to life insurance whereas a lump sum is payable on an event that renders the person insured unable to ever work in an occupation again. The cause of the disablement can be any medical event excluding self-harm or a specific exclusion determined at application by the insurer, and basically includes any medically diagnosed illness or injury. As an example, the majority of claims result from cancers and skeletal injuries.

TPD Insurance is designed to cover the financial risk of losing the ability to work along with the increased costs of ongoing care. It is common to insure debts, loss of income and additional capital for possible home alterations and ongoing medical costs. It is also common for the level of TPD Cover required to be higher than that of Life Cover as under Life Insurance there is no need to cover the ongoing expenses of disablement, loss of incomes and ongoing medical care.

What TPD Insurance definitions are available?

There are a number of forms of TPD Cover that can be obtained and each type can dramatically alter the requirements and eligibility for claim. These include:

• Non Occupational TPD Insurance – this is a loss of independence style policy and the cheapest available. In order to claim the life insured needs to be unable to independently conduct 2 of 5 listed activities of daily living, for example, bathing or eating. Given the higher severity of disablement required for claim, this style of TPD cover is the cheapest option, however is the most difficult to claim.
• Any Occupation TPD Insurance – Any Occupation TPD Cover requires a person to be unable to work in their occupation again or any occupation to which they are suited via education, training or experience. In assessing claims under this definition, the insurer will first assess the person’s ability to do their own occupation, and then will assess if that person can do another suited occupation. If it is deemed that a person can do another occupation, then the definition will not be met.
• Own Occupation TPD Insurance – Own Occupation TPD Cover requires a person only to be disabled from their occupation. This is the most expensive of the options, however offers the strongest definition and most claim certainty. Should the life insured be unable to work in their occupation but can work in another, this is ignored by the insurer and a claim payment is still made.

There have been a number of TPD updates recently including TPD definitions that are based on physical function in addition to the standard occupational disability definition and also definitions that allow an ability to generate a portion of income. Both variations to the definitions of TPD Insurance can provide more flexibility at claim.

TPD Insurance entry and expiry ages are slightly more restrictive than Life Insurance. Policies under the ‘own’ or ‘any’ occupation definition will normally either expire at age 65 or will revert to the ‘non-occupational’ style of policy. If the option to revert a TPD Insurance policy to a ‘non-occupational’ definition at age 65, a policy can generally be held up until the age of 80.

Some providers place upper limits on the level of cover that can be obtained to $5m that consists of a mixture of the own occupation and any occupation definition. If an applicant requires a sum greater than $5m, this can be applied for with financial substantiation.

TPD Insurance can be linked with Life Insurance or taken as a ‘stand-alone‘ policy. Linking TPD Insurance with Life Insurance generally results in a lower premium, however if a TPD claim is made, it can result in the Life Insurance being reduced by the same amount for a period of 12 months, or indefinitely depending on the policy offered.

3MinuteInsuranceQuotes.com.au compares TPD Insurance policies from over 12 major Australian Life Insurance companies. All TPD Insurance quotes are instant, on-screen and anonymous. Start your TPD insurance quotes here.

Income Protection is known by a range of names including Salary Continuance Cover and Sickness and Accident Cover. The ability to generate an income is arguably a person’s biggest asset and Income Protection is an ongoing income policy designed to replace your income in the event of result of illness or injury and you are unable to work.

Income Protection is one of the broadest and most claimed on policies and will replace up to 75% of your income. Income Protection pays that benefit for the length of your disability or the expiry of the benefit period. When compared to lump sum policies, Income Protection can seem more complex; however the variables available allow a person to customise the policy to their specific circumstances.

There are a number of key terms and variables under an Income Protection policy that need to be considered when deciding what is appropriate to insure:

• Waiting Period – the waiting period is the length of time from the date of injury/illness that a person needs to be unable to work before benefits start to accrue (not the start date of the policy). It can be considered similar to an ‘excess’ and there are a number waiting periods available from 14 days right up until 2 years. It is also possible to obtain an additional option that reduces the waiting period for accidents down to 3 days.
• Benefit Period – the benefit period is the period that a person accrues and receives benefits. The benefit period also defines the extent that a person can claim per injury/illness. The most common options available are a 2 year, 5 year and an until age 65 benefit period. Insurers are also offering a benefit period to age 70 for white collar workers.

It is common for people who are employed on salary and wages to discount the need for Income Protection as it is believed that Sick Pay and Worker’s Compensation will provide adequate coverage. This is a common misconception. Workers Compensation varies significantly between the states and only covers for workplace injuries (or illnesses directly caused by the workplace). An employee suffering for example, a heart attack at work or injuring themselves at home on the weekend is outside of the scope of Workers Compensation and can leave someone without the financial resources to both recover and rehabilitate and to maintain their standard of living.

Income Protection generally does not provide benefits for redundancies or loss of income for reasons other than sickness or injury, however some policies including some limited benefits to assist cover debt repayments.

Those who are self-employed in small business can be said to have the greatest risk. With no sick pay/annual leave and in a lot of circumstances most cash flow being used in the business, interruptions to income due to illness or injury can have dire consequences. Insurer’s treat ‘insurable income’ slightly differently for the self-employed and rather than salary and wages, the insurers look at the level of net (after business expenses) income that person generates before tax. In a lot of circumstances also an insurer will allow an applicant to add back certain expenses like depreciation, donations and motor vehicle expenses to increase the monthly benefit available.

Like Trauma Cover, Income Protection policies vary greatly both in regards to their ‘core’ definitions like how the insurer deems you to unable to work, benefit offsets and waiting period requirements; to their ‘ancillary benefits’ like automatic payments for certain injuries, rehabilitation benefits and extra payments in certain circumstances. Good advice is paramount to ensure that you obtain a policy suited to your requirements.

3 Minute Insurance Quotes compares Income Protection policies from over 12 major Life Insurance companies and all Income Protection quotes are instant, on-screen and anonymous. Start your income protection insurance quotes here.