Personal risk insurance: Trauma insurance explained.
Insurance plays a vital role in protecting your financial wellbeing and providing peace of mind by helping you manage risks. There are different types of insurance to help manage different types of risk. The main types include general insurance, which is used to protect things you own, such as your home and your car, and personal risk insurance which covers things like life insurance and income protection insurance.
At Beyond Bank, we want to help our customers make informed decisions about personal risk insurance products. This guide will help you understand trauma insurance.
Why is personal risk insurance important?
Personal risk insurance helps safeguard you and your family or dependents against financial loss caused by death, disability and illness or injury.
There are four main types of personal risk insurance – Life insurance, income protection insurance, total and permanent disablement insurance and trauma insurance. They can be used separately to protect against specific risks and they can be used together to protect against a broad range of risks.
The different types of insurance are often bundled together. Personal risk insurance is an important part of building financial security and resilience.
| Type of insurance | How it works | What is might be used for |
| Life insurance | Pays a lump sum amount to the beneficiaries if the insured person dies | The lump sum amount might be used by beneficiaries to do things like pay off debt, pay school fees and education expenses and pay ongoing living expenses. |
| Income protection insurance | Pays a regular amount for a specified period of time to replace the income of the insured person if they can’t work due to illness or injury. | The insured person might use the regular payment to pay ongoing living expenses, make loan repayments and superannuation contributions. |
| Total and Permanent Disablement (TPD) insurance | Provides a lump sum payment if the insured person is totally and permanently disabled and unable to work. | The insured person might use the lump sum amount to do things like pay medical expenses, pay for modifications to their home, pay off debt, pay school fees and education expenses and pay ongoing living expenses. |
| Trauma insurance | Provides a lump sum payment if the insured person suffers a specific serious injury or illness. | The insured person might use the lump sum amount for things like medical expenses, make modifications to their home and pay ongoing living expenses. |
What is trauma insurance?
Trauma insurance pays a lump sum payment if the insured person is diagnosed with a specified critical illness or medical condition, such as cancer, heart attack or stroke. It’s also called critical illness or recovery insurance.
Why it's important.
Trauma insurance is an important way of building financial security and resilience. The payment received under a trauma policy might be used to help pay medical expenses, pay down debt and fund ongoing living expenses.
Things to consider.
Trauma insurance is often bundled with life insurance and TPD insurance. When bundled with life insurance, a trauma payment may reduce your life insurance cover.
To decide whether you need it and if so, how much you may need, consider what expenses you would need to continue to pay if you were unable to work for a period of time. These costs might include things like ongoing living expenses for you and your family, mortgage payments, credit card repayments, personal loan repayments and covering medical and health costs. Also, think about what other money you might be able to access to help cover these costs including savings, investments and other types of insurance like Income Protection and TPD insurance.
When comparing policies, check things like what illnesses and injuries are covered, exclusions, waiting periods, cover limits and whether the premiums are stepped or level.
If you need help deciding whether you need trauma insurance, how much cover you need or which policy to choose, speak to a financial adviser.
We’re here to help.
Figuring out whether you need personal risk insurance, what type you need and how much cover you need can be complex. If you need help understanding your options, contact your local branch, call us on 13 25 85 or visit our website and we’ll arrange a referral to a financial adviser from Bridges Financial Services. As a Beyond Bank customer, your first appointment is free.
