Rising insurance premiums over the last few years have encouraged many of our clients to reassess their insurance needs. This includes looking at the different types of cover, what they provide for, and whether they suit your needs and budget. Many insurance policies include Trauma cover – but what exactly is it, and what does it cover?
What is Critical Illness insurance?
Critical Illness – also known as Trauma – is a type of insurance that provides a lump-sum payment in the event of certain medical conditions that have a significant effect on your life. For example, an illness or injury that would result in expensive rehabilitation and major changes to your living arrangements. It is designed to provide a cash injection for you and your family while you are recovering or in rehabilitation. It is paid as a lump sum and can help cover the cost of medical treatment, living expenses, or changes to your lifestyle.
What does it cover?
The specific conditions and injuries that are covered will be specified in your insurance Product Disclosure Statement (PDS). These vary depending on who you take out insurance with, but the conditions covered typically include:
- Heart attack
- Cancer
- Stroke
- Coronary artery bypass.
The policy wording will specify the severity of the condition required for a claim. For instance, the seriousness of skin cancer (and the treatment required) can vary significantly; a claim for the removal of a sun spot would not likely meet the policy wording whereas if the condition is severe and requires long-term treatment such as chemotherapy it would be more likely to meet the definition of a claim.
How does it work?
Unlike Income Protection insurance, Critical Illness insurance often doesn’t depend on your ability to work. To make a claim the test is whether the medical condition meets what is written in the policy. This can mean that a payment is made even if the claimant has little or no time away from work. It is an event specific type of insurance policy.
Things to consider
When applying for Critical Illness, it’s important to bear the following points in mind:
- It is not the same as medical insurance: it does not automatically cover medical expenses. It’s up to you if you choose to use all or part of your payout for medical costs
- You may not be eligible to make a claim for a medical condition/injury that occurs within 90 days of your policy going into force
- You generally can’t claim for injuries or conditions which are considered self-inflicted, whether directly or indirectly
- The specific policy wording is what matters when it comes to making a claim. There are many different types of cancer and it depends on the policy wording in each policy to determine which types of cancers are covered (and the severity of each).
Everyone’s circumstances are different and so it’s important to find the insurance options which work best for you and your family – getting the right amount of cover to give you peace of mind, but also taking your budget into account.