Taking the financial drama out of trauma

A QUICK look at any of the range of national health statistics shows that the addition of trauma and health insurance to an individual’s other insurance products makes good business sense.

In the next 12 months it is estimated around 30,000 people in Australia will suffer a heart attack, 55,000 will develop malignant cancer, 25,000 will suffer a stroke and 11,000 will undergo a heart by-pass operation.

Trauma insurance is designed to cover such events, providing a lump sum payout on the diagnosis of a serious illness including cancer, heart attack, stroke or dementia.

If a person suffers a medical trauma, term life insurance does not help because the individual is still alive.

If a person has a heart attack or is seriously ill but is able to return to work after a period, they may not be as productive as before or be able to stand the stress of working as before the trauma.

Policies such as income protection insurance and totally permanent disability insurance may not be suitable in such a situation either, as a payout depends on the effect of the event after its occurrence.

What is needed, then, is a cover such as trauma insurance, which pays out on the actual occurrence of the incident.

The payout can be used for anything, from paying for medical expenses to buying special equipment such as a wheelchair, or even on a holiday for recovery purposes.

The money can be used to pay debts, avoiding financial stress in recuperation. It can cover the cost of home modifications or to pay for specialist medical attention.

According to the Private Health Insurance Administration Council, trauma insurance is unlike private health insurance in that it is risk-rated rather than community rated, and generally offers lump sum payments in the event of specific illness or loss. The insurance is not a substitute for registered health insurance.

Health funds that provide private health cover follow a principle known as ‘community rating’. Under this principle the premiums charged by the funds do not vary according to age (other than age of entry), sex, state of health or the size of the family. For example, a single, healthy 20-year old and a single, unwell 60-year old will pay the same premium for the same cover.

This is different in the case of the various risk insurances, including trauma insurance, on offer.

With around 40 registered health funds operating around Australia, it can be difficult to sift through the different options.

Advice is available, however, through an organisation called iSelect, an independent group with a comprehensive database covering around 5,000 health insurance products on a broad range of health insurance policies Australia-wide. iSelect works on a commission from insurers in the same way as any other insurance agent.

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