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What you'll learn
Benefits of having critical illness insurance (trauma insurance) in place
A critical illness benefit is versatile. It provides the flexibility of using the funds as one wishes, whether it is to help with medical treatment, rehabilitation, mortgage payments or other expenses. Without adequate insurance coverage, these financial burdens can quickly drain a person’s savings. Critical illness covers specified serious events such as a heart attack, cancer, or stroke, although this is not an exhaustive list.
Having critical illness insurance (trauma insurance) may be a prudent and responsible choice, depending on the circumstances. It provides the financial security and peace of mind to navigate recovery. Having a critical illness insurance policy in place may provide the ability to financially support the costs involved in treatment and recovery when life takes an unexpected turn. There may also be additional benefits and options which can be added to a critical illness insurance policy at an additional cost. These key features may include, but are not limited to (and will vary between insurers and different policies):
- Inflation protection – an option to increase the sum insured amount each year to allow for inflation.
- Premium Freeze – an option to freeze the premium with a decreasing sum insured amount.
- Guaranteed future insurability – an option to increase cover without underwriting based on a specified life event – such as having a baby.
- Grief support – a service to help customers and their families and,
- Financial planning – may provide a payment to help customers and their families work with a financial planner.
Critical illness insurance can generally be held under a stand-alone policy or as cover linked with a life insurance policy or total and permanent disability policy. Linked policies may allow total premiums to be lower than if each type of insurance is held as a stand-alone policy. This is because for linked policies, generally, an amount paid on one policy (e.g. critical illness) will reduce the cover amount on the linked policy (say for death). For stand-alone policies, a claim on one policy (e.g. critical illness) does not impact the cover amount on the other policy (e.g. death cover).
Child's critical illness insurance is also a life insurance option available by most insurance providers. Similarly, it provides a lump sum benefit payable if a child suffers a critical illness (or trauma) event meeting severity requirement. This may provide the financial peace of mind required if the insured’s child suffers a critical illness and the insured is unable to work. This gives the insured the ability to support their child through medical treatments and recovery without the need to juggle work. Limits generally apply to cover amounts. For further information contact the insurance provider or visit the TAL Website.
Illnesses and injuries not covered under a critical illness insurance or trauma insurance policy
When taking out any insurance cover it is important to understand the terms, conditions, and exclusions of each policy. The Product Disclosure Statement (PDS) is an important resource to find out more specific information about each type of cover. Common terms, conditions, and exclusions to consider include:
A pre-existing condition
Pre-existing conditions are conditions the person insured had prior to taking out the policy. Critical illness policies may exclude cover for pre-existing conditions, so it is best to understand the terms of the policy.
Many critical illness policies will have a qualifying period for certain critical illness events, which means if the specified critical illness occurs after the policy is purchased but within the qualifying period, the policy will not cover that critical illness.
Excluded medical conditions
Not all critical illnesses are covered, and severity of illnesses are defined. These illnesses and definitions will vary between policies. For example, not all cancers are covered.
Bridging the gap in health insurance with critical illness cover or trauma insurance cover
While health insurance covers many medical expenses, it may not cover all the costs associated with a critical illness (or trauma event). There may be non- medical expenses that health insurance does not address. Critical illness cover may fill these gaps, helping with out-of-pocket expenses that can strain finances.
When considering critical illness insurance (or trauma insurance), it is essential to carefully review policy terms and compare policies from different insurers to choose the right coverage. With the right policy in place, the insured can face the uncertainties of life with more confidence and resilience.