Part 4 - What is Trauma Insurance, and is it the same as Health Insurance?

Why is Trauma insurance important?

• It helps to minimise the financial risk you could suffer if you are diagnosed with a specific medical condition. The trauma benefit can help to maintain your present and future goals and objectives.
• It will provide you with a lump sum payment if you’re diagnosed with a specified ‘trauma’ condition. Trauma insurance provides you some financial security by helping to cover your medical costs and living expenses, including giving you time to recover. Trauma insurance will give you cover against significant illnesses such as certain cancers, strokes, heart attacks, etc.

How much Trauma insurance should I have?

The appropriate amount of cover for you will depend on both your family and financial situation. However, there are certainly some items that are worth considering when determining the level of cover you require.
These include:

• Medical or nursing care requirements
• Medical equipment costs
• Repayment of debts if appropriate
• Replacement of income for a period of time

Can I link this policy to my Life Policy held inside Super?

Yes, Flexi-linking of Trauma insurance allows the life insured to obtain a Trauma benefit held outside of superannuation linked to a life benefit held within superannuation, helping reduce the cost of the trauma insurance. Note that if you claim on your trauma insurance, your life benefit will be reduced by the claimed amount unless you have the life buy-back option.

What is the difference between my Health Insurance and Trauma Insurance?

Trauma Insurance is not designed to replace your existing health insurance. Trauma insurance is designed to take away the financial burden if you are diagnosed with a critical illness such as a stroke, heart attack, or diagnosed with a type of cancer, etc., as it provides you with a lump sum amount to use as you wish.

Private health insurance helps cover the cost of diagnosis and treatment of a critical illness, but it is a widely held belief that if you have private health insurance, all of your medical costs are covered, which unfortunately is not the case. Trauma insurance can often fill the gap that is left with private health insurance.

So how do can I pay for my Trauma Insurance?

Due to Superannuation law, you cannot fund these premiums through your superannauiton and therefore need to be funded from your cash flow. Unfortunately, these premiums are not tax-deductible either.

Like with all personal insurances, you can generally choose to pay for TPD insurance with either:

• Stepped premiums: recalculated at each policy renewal, usually increasing each year based on the higher chance of a claim as you age
• Level premiums:  charge a higher premium at the start of the policy, but changes to cost aren't based on your age, so increases happen more slowly over time

Your choice of stepped or level premiums will impact how much your premiums will cost now and in the future.

What do I do now? I hear you ask.

• You could do some calculations about what cover you need, source a company with a policy that matches your needs and budget, work out how you want to pay for the insurance, and then go ahead and apply to the company directly. Or;
• You could book an appointment with me to review all your existing insurances and receive a professional recommendation to ensure you have the right level of cover.

OR

• You could click the hyperlink to get a FREE copy of my "The 12 Biggest Mistakes People Make With Their Personal Insurances. And How To Avoid Them" eBook. This book will give you a great understanding of the most common mistakes people make when getting their insurances sorted and how best to avoid them, so you don't repeat their mistakes. There is an old saying, "You should always learn from your mistakes," but isn't it better when you get to learn from other people's mistakes!

And don't forget to follow me on my socials for regular updates in the industry as well as tips and tricks to help you manage your finances better.