Why take out trauma cover?
TRAUMA insurance is also known as critical illness insurance.
This type of policy provides a lump sum payment in the event of a major illness or injury that may prevent the life insured from returning to work for a period of time or significantly impacts on their quality of life or is life threatening.
Claim proceeds are generally used to pay medical expenses or help the person to recover and spend time with family. The lump sum may be used to:
. Pay off debts to reduce stress and pressure on cashflow
. Pay medical and care expenses
. Pay for a holiday to help with the person's recovery and allow family time
. Provide an income or cash reserves so a spouse can take time off work.
The premiums for trauma policies are generally higher than a comparable amount of life cover because the incidence and risk factors are generally higher.
However, clients generally do not need as much trauma cover as they do for death or TPD because it is often a short-term need and clients may have other policies to cover longer term needs.
These policies cannot be structured or funded through a superannuation fund so the premiums must be met from your own cash flow. Claims are paid to the policy owner.
This may be the life insured or another person or entity if they are the owner of the policy.