What is Trauma Insurance?

Trauma insurance – or Recovery insurance – provides you with a lump sum on  the diagnosis (or occurrence) of one of a list of specified serious medical conditions and procedures. Each insurance company maintains their own list, but they generally include serious medical conditions such as cancer, heart attack or stroke.Child hugging mother large

Trauma insurance is designed to provide you with money when you need it most. This payment is made regardless of whether you are able to resume work and is designed to relieve financial pressure at a time when you are under great stress.


If a person suffers a critical illness (trauma), term life insurance will not be paid as the person is still alive. Trauma insurance was designed to help suffers of a trauma event (such as a heart attack) have enough financial resources to aid their recovery without the stress of worrying about how to fund this. Trauma insurance pays out a lump sum on the actual occurrence of a trauma event and is not dependent on what happens after the event. In fact if health allows you to quickly resume a normal life after a trauma event then your insurance has been a good investment and you can use the funds for any purpose you see fit.

How much cover is enough?

Everyone’s situation is different, the level of Truama cover required will vary depending on your requirements.  It is best to talk to a qualified risk adviser such as Care4Wealth who has the experience and expertise to guide you in choosing the right amount of cover for your needs, the right policy for your particular situation and budget. Trauma insurance premiums vary depending on age and health history. The premium rates are determined by factors such as: amount of cover sought, age, sex, health, occupation and smoking habits.

The function of trauma insurance may be to:

  • Pay for specialist medical attention not covered by health insurance
  • Cover the cost of modifications to the home
  • Reduce debt if this is important
  • Avoid financial stress in recuperation (debts, etc)
  • Reduce working hours
  • Allow help for a home maker who is recuperating
  • Allow a working spouse to take time of work to care for a family member who needs help

Trauma insurance (also known as critical illness insurance) provides a cash lump sum in the event of contracting a specified disease or trauma. The number of conditions covered (benefits) varies widely, cheaper policies often offering less benefits.

Medical definitions vary between insurance companies, so make sure you do your research and seek assistance from your adviser when choosing a policy. What one company defines as a ‘severe burn’ may not be considered ‘severe’ enough by another. Some companies also offer partial payments, depending on the level of severity.

In most cases “accidental” types of traumas are covered immediately, although many insurers impose a waiting period (commonly 90 days after the policy is accepted) for certain illnesses. Typically trauma policies will pay benefits in the case of some or all of the following critical illnesses:

  • Aplastic anaemia
  • Blindness
  • Burns – severe/major
  • Cancer
  • Cardiomyopathy
  • Coma
  • Coronary artery angio
  • Coronary bypass surgery
  • Deafness
  • Dementia
  • Diplegia
  • Encephalitis
  • Heart attack
  • Heart valve surgery
  • Hemiplegia
  • HIV -occupational acquired
  • Kidney failure – chronic
  • Liver disease – chronic
  • Loss of independent existence
  • Loss of limbs and/or eye
  • Loss of speech
  • Lung disease – chronic
  • Major head trauma
  • Major organ transplant
  • Motor neurone disease
  • Multiple Sclerosis
  • Paraplegia
  • Parkinson’s Disease
  • Pulmonary hypertension
  • Quadriplegia
  • Stroke
  • Terminal illness
  • Life Cover – death benefit
  • Total & Permanent Disability
  • Aortic surgery
  • Out of hospital cardiac arrest
  • Benign brain tumour
  • HIV – accidental infection
  • Peripheral neur


Different products have different definitions and you should obtain a copy of and consider the Product Disclosure Statement (PDS) for any financial product mentioned before making any decision to acquire a financial product. The information used in this website is of general nature only and is not intended as a personal advice. It does not take into account your particular investment objectives, financial situation and needs. Before making a financial decision you should assess whether the advice is appropriate to your individual investment objectives, financial situation and particular needs. We recommend you consult a professional adviser who will assist you.