Ask an Adviser – What is Trauma Insurance and why do I need it?

December 7th 2021 | Categories: Insurance | Ask An Adviser |

ask an adviser - luke warren

Here, Luke provides a brief overview of this all-important insurance cover.

Q. What is Trauma Insurance?

As the name suggests, Trauma Insurance assists people who have experienced something traumatic in their lives. It’s also known as Critical Illness Insurance or Recovery Insurance.

It’s one of the more important insurances with respect to what it actually covers and can assist people in the event of injury or illness (those to a lesser degree than injuries or illnesses that may lead to a Total Permanent Disability claim).

Examples of illnesses or injuries that could lead to someone claiming Trauma Insurance may include a cancer diagnosis, stroke, heart condition, head injury or brain injury.

A Trauma Insurance payout helps alleviate a recipient’s financial pressures, enabling them to fully focus on their recovery.


Q. And this type of cover is not included in people’s superannuation?

That’s right. Whilst certain superannuation funds may include some level of cover for Total Permanent Disability (TPD) or Life insurance, Trauma Insurance cannot be held in a superannuation fund. It would need to come out of a bank account or a person’s income payments.


Q. Do you always recommend Trauma Insurance to your clients?

We believe Trauma Insurance to be an important consideration and it’s something we discuss with our clients, presenting it to them as an option. Of course, it’s up to each individual as to whether they take it up.

Together with a client, we assess goals and priorities and of course, the affordability of such insurance in relation to those goals is discussed. Understandably, a lot of claims come out of this type of cover so it’s fair to say that it isn’t the cheapest insurance so it’s about looking at the big picture.


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Q. What kind of costs would Trauma Insurance help with?

Simply, whatever best meets the needs of each client. The first step is to have a conversation about what that client would be most comfortable with and base any cover on that. For example, their priority might be to reduce some debts or to have 12 months of their income paid for. Other considerations may be things like out-of-pocket medical expenses, household bills or living expenses.


Q. Could a client embark on a family trip to Europe with that lump sum payment if they wish?

Indeed, they could. We’d start by doing a needs analysis and look at what is most important to them and what they want to cover but essentially, people can absolutely do what they wish with their payout.


Q. Can you assist clients looking to set up Trauma Insurance cover?

Absolutely, and we would guide them on what we feel may be appropriate for their needs. We would also ensure it’s a comprehensive policy.


Q. If someone is reading this and learning about Trauma Insurance for the first time, what’s the next best step to find out more?

The next step is to speak to your Financial Adviser about whether Trauma Insurance is something worth considering. For those not already on board with Invest Blue, we encourage them to get in touch as this type of cover can be life-changing.


Thanks so much for your time, Luke.


One particular person who found Trauma Insurance incredibly helpful during a heartbreaking period for her family is Armidale-based Tracey Diefenbach. Read her moving story here.


Featuring Financial Adviser

Luke Warren

Luke Warren, Armidale Planner

Connect with Luke on LinkedIn

Invest Blue is here to help. To understand the types of personal insurance that may be appropriate for your circumstances, book a chat with Luke or one of our other financial advisers.

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What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.