Trauma Cover & Income Protection: Do You Really Need Both?
Trauma cover and/or income protection? The differences may be subtle for a lay person, but there are certain and lasting implications to choosing one or both of these and you need to consider them in detail before making a decision.
Trauma cover is a relatively new insurance product in the market. It ensures that you get a lump sum payment to support yourself and meet the unexpected medical expenses in case you are diagnosed with an illness. Up to 40 different conditions can be included in the coverage.
Income protection, on the other hand, provides you with an income in case you suffer from a sickness or an injury and are unable to work. There is a lot of flexibility available in the design of the benefits to suit each person’s individual circumstances and requirements including a choice of waiting and benefit periods among many features.
The question of whether a trauma cover suits you or if an income protection cover is more viable, or if getting both is the more sensible thing to do, really depends on your situation, aspirations and personal situation. Your circumstances may be different to everyone else’s and your financial objectives too are unique. So, the best advice we can give you is to seek guidance from your trusted financial advisers and make an informed and well considered decision.
Meanwhile, here’s some pertinent and useful information on the subject.
What is trauma cover?
Life can throw some random and unexpected events at you. If you were to suffer from a medical emergency that may include time spent in hospital in addition to taking time off from work, a trauma cover can provide financial help.
As mentioned earlier, it usually covers around 40 different conditions. The insurance is paid upon receiving proof of being diagnosed with an illness that is on the list of covered conditions. This is a lump-sum payment that is offered in addition to your health fund claim, accrued sick leave, and income protection claim.
It can help cover costs that you may not be able to afford otherwise, such as:
Treatment, medication, therapy, and rehabilitation costs that are not covered by your health fund or by Medicare
Paying out debts such as mortgage and living expenses while you are unable to work
Modifications to your home, living space or vehicle if the effects are likely to be more permanent, but still short of a total and permanent disability (TPD)
Paying for the extended time taken off work so you can recover fully
Travelling interstate or overseas to access appropriate medical care
Note: These points refer to what is generally covered under a trauma insurance policy. However, the details may vary between insurers. To understand what’s covered under your policy, please read the product disclosure statement (PDS) or speak to your trusted financial adviser about the definitions and exclusions.
What is income protection cover?
Income protection cover pays up to 70% of your pre-tax income for a specified amount of time – if you are unable to work due to a partial or total disability. The cover is designed to replace your income under this circumstance, based on your annual earnings in the last twelve months prior to your illness or injury.
For more information on this subject, read our detailed and informative blog post here.
Note: Each policy has its own definition of partial or total disability and the defined criteria must be met before a claim is made. To understand what’s covered under your policy, please read the product disclosure statement (PDS) or speak to your trusted financial adviser about the definitions and exclusions.
What is the difference between–trauma cover and income protection cover?
Here are the broad differences: Trauma cover insurance is paid immediately upon the diagnosis of an illness or injury. It is not required that the person be unable to work and there is no waiting period. Income protection, however, can only be collected when you are unable to work. The payout is a percentage of your earnings and will be less than you are used to taking home.
Talk to a trusted financial adviser
The subject of trauma cover and income protection can be complex and confusing. From choosing the right insurance provider to getting comprehensive cover in place – there is much thought and deliberation required. Ultimately it is about safeguarding what’s important to you. Talking to a financial adviser may be helpful in this matter.
Advisers have qualified knowledge of the various providers and their products that are available in the market. They can help you pick and choose the cover that is most appropriate for you. They also provide guidance on how to handle your claim, should the situation arise, and assist you in the process. But above and beyond all this, advisers can help you save money and time while also leading you to the best choice and course of action.
At Oakmont Financial Group, we care about your financial future and your peace of mind. We provide personalised financial advice on insurance to suit your life stage and lifestyle. Talk to us today. We will be delighted to hear from you.
General Advice Disclaimer
The information contained on this website and in this blog post is general in nature and does not take into account your personal situation or circumstance. It is recommended that you consider and use the information provided responsibly and, where appropriate, seek professional advice from a financial adviser.
Although every effort has been made to verify the accuracy and correctness of information, Oakmont Financial Group, together with our consultants, officers, agents, and employees, disclaim all liability for any loss or damage suffered by any persons directly or indirectly relying on this information.