Trauma insurance which is sometimes called critical illness insurance provides a lump sum benefit if you suffer a illness or injury that is listed in your trauma insurance policy. Illnesses usually covered include, heart attack, stroke or cancer.

Quite often if you suffer a serious injury or illness medical costs can be significant even if you do have health insurance. These expenses can run into the the tens of thousands of dollars. Health insurance may also not cover all your rehabilitation expenses. On top of medical costs, your everyday living expenses or debt repayments don’t stop and a lump sum benefit could help provide breathing space so you don’t have to return to work whilst you are still recovering.

Unlike income protection, premiums are not tax deductible.

Whilst income protection may come into play it does not provide the immediate access to a lump sum which may be required for medical expenses.

It is not usually available via superannuation.

You do not have to be working to be able to apply unlike income protection which makes it suitable for non working spouses or single parents especially those that are looking after the household or children.

Not all policies are the same. Different policy providers have different lists of illness and injuries and different requirements.

How much cover you take out can often be a trade off between what you think you will need and the cost. Generally you might consider an amounts for medical expenses, rehabilitation, house modifications, income replacement for a short period and possibly provision for a nanny or housekeeper if relevant.

Disclaimer: Trauma insurance is a complex product and requires professional advice. It is highly recommended that you seek professional advice from a Financial Planner.