Personal risk cover
Trauma insurance
We help you understand trauma insurance and arrange cover that pays a lump sum if you are diagnosed with a serious medical condition. No pressure, no jargon, just clear advice tailored to your situation.
5.0 from 15 Google reviewsNo separate advice fee for our advice
A lump sum the day a diagnosis lands.
A serious diagnosis brings costs well beyond the hospital. Trauma cover pays cash to you, on diagnosis, so a health crisis does not become a financial one.
Also called critical illness
It pays on diagnosis, not on stopping work
Trauma insurance, also called critical illness insurance, pays a lump sum, generally tax-free when held personally, if you are diagnosed with a defined serious medical condition, such as cancer, a heart attack or a stroke. The key feature is the trigger: it pays on diagnosis, whether or not you can still work. You do not have to be permanently disabled, and you do not have to stop working to claim. The money is yours to use however you choose, so a serious diagnosis does not have to become a financial crisis on top of a health one. Below we explain what it covers, how it differs from other cover, what the lump sum is for, and how we help you arrange it.
What it covers
A defined list of serious conditions
Trauma pays out on a defined list of conditions, and the exact list and each definition vary between insurers. Comparing the definitions, not just the names, is what decides whether a claim is paid.
Cancer
Often the most common claim
Heart attack
To the policy's definition
Stroke
With lasting effects
A lump sum on diagnosis, generally tax-free when held personally
Paid whether or not you can keep working, and yours to use however you choose.
Yours to use
What the lump sum is for
Unlike private health insurance, which pays providers towards your treatment, trauma cover pays cash to you. A serious diagnosis brings costs well beyond hospital bills, and the payment is designed to absorb them.
What the lump sum covers
- Medical and treatment costsOut-of-pocket expenses Medicare and private health do not fully meet.
- Time off workIncome for you, or a partner who steps back to become a carer.
- Debt and billsKeep the mortgage and living costs running through the disruption.
- Treatment choicesThe freedom to weigh up options without money deciding for you.
Three covers, three triggers
How it differs from TPD and income protection
These three are often confused, but each responds to a different event. Trauma pays on the diagnosis itself, so it can pay even if you recover and return to work. Because the triggers differ, a single event can sometimes meet more than one.
What triggers each one
- TraumaPays a lump sum on diagnosis of a defined condition, generally tax-free when held personally.
- TPDPays a lump sum only if you become permanently unable to work.
- Income protectionPays a monthly income while a health event keeps you off work.
At claim time
How a trauma claim works
A trauma claim is often faster than people expect, because it hinges on diagnosis rather than long-term outcomes. Some conditions carry a short survival period, one more reason to read the definitions closely.
From diagnosis to payment
- 1You are diagnosed with a conditionA specialist diagnoses a condition on your policy's list.
- 2It is assessed against the definitionThe insurer checks the evidence meets the specific wording.
- 3The lump sum is paidPaid in full. You do not have to be unable to work or wait for it to progress.
When it matters
Do I need trauma cover, and how much
There is no general yes or no. It tends to matter most if a serious diagnosis would put real financial pressure on your household. How much follows the same logic: it is sized to your commitments, not to a one-size-fits-all figure.
Who it helps most
- You carry a mortgageA diagnosis would put real pressure on the repayments.
- You have dependantsOthers rely on your income through a health setback.
- A limited savings bufferLittle put aside to fund treatment and time off.
Why a specialist
Trauma lives or dies on its definitions
Those definitions differ enormously between insurers, which is where advice earns its keep. We read the wording, fit it alongside your other cover, and stand beside you at claim time.
Where we add value
- Compare definitions, not priceTwo policies covering the same conditions can pay very differently.
- Fit it alongside your other coverSlot it with TPD, income protection and life, without overlap.
- Size it to your situationA benefit that reflects your debts and dependants.
You do not have to stop working to be paid. A diagnosis is enough.
FAQs
Frequently asked questions
Is trauma insurance worth it?
That depends on your circumstances, and we cannot give personal advice here. As a general guide, it tends to matter most if a serious diagnosis would strain your finances, for example if you have a mortgage, dependants, or limited savings to fund treatment and time off work. Because it pays on diagnosis rather than on losing your ability to work, it can help even if you recover and return to work.
What conditions are covered?
Trauma policies cover a defined list of serious conditions, commonly including cancer, heart attack and stroke, and often major organ transplant, multiple sclerosis, Alzheimer's disease and others. The exact list, and the definition of each condition, varies between insurers. The definitions decide whether a claim is paid, so comparing them closely matters more than counting the conditions listed.
Is the trauma payout taxed?
Generally, no. For cover held in your own name outside superannuation, the lump sum is typically paid tax-free. The treatment can differ depending on how the policy is owned, so confirm your own position with your accountant. This is general information only.
Trauma vs TPD, what's the difference?
The trigger. Trauma pays a lump sum on diagnosis of a defined serious condition, regardless of whether you can still work. TPD pays only if you become totally and permanently unable to work. Trauma can pay even if you recover, whereas TPD is built for the reality of never working again. Some people hold both, because a single event can sometimes meet both triggers.
Can I hold trauma cover in super?
Generally, no. Trauma cover is usually held outside superannuation. A benefit can only be released from super when a condition of release is met, and a trauma diagnosis on its own does not always meet one, so a payout could end up trapped in the fund. For that reason trauma is most often arranged as a policy you own and pay for directly. The structure depends on your circumstances, which we work through with you.
How much do I need?
Enough to cover what a serious diagnosis would actually cost your household, such as out-of-pocket medical costs, time off work for you or a partner, and debts or bills you would want kept under control. It is sized to your commitments rather than to a standard figure, and it depends on what other cover you already hold. An adviser can help you work out the right amount.
Related cover
Cover that works alongside it
Protect against a serious diagnosis
A lump sum, so you can focus on recovery
A no-obligation chat with a specialist who reads the condition definitions, fits trauma alongside your other cover, and sizes it to your situation. No separate advice fee for our advice.