Trauma insurance pays a lump sum upon the medical diagnosis of a trauma as outlined in an insurer’s product disclosure statement (PDS).
For this reason it is very important for you to understand the definitions of each trauma, as well as the policy optionsavailable, as both of these can greatly affect your benefit at claim time.
There are a number of trauma insurance policy options available to you, as outlined below.
Stand Alone Policy
This is where a policy is purchased separately (unlike a rider policy), with its own sum insured.
Rider or Bundled Policy
A rider or bundled policy is typically attached to a life insurance policy, where the total sum insured is joined to both policies.
In this situation it is very important to consider how much you would like to be insured for, and whether a buy-back, reinstatement or double benefit option would be beneficial. These 3 options can help your final claim benefit payment, and below we define each one:
- Life insurance buy back – option to buy back your life insurance 12 months after a trauma claim is paid. Some insurers offer this for free.
- Trauma cover reinstatement – option to reinstate the trauma cover portion 12 months after a trauma claim is paid. After reinstatement, your first trauma event is usually excluded from future claims.
- Double trauma option – option to buy back your life insurance after 30 days of making a trauma claim. The life cover bought back is premium free.
Policy ‘Plus’ Options
A ‘Plus’ option refers to additional trauma event coverage which can be purchased on top of the standard cover offered by an insurer.
The cost varies between insurers, as do the additional trauma events covered. Be sure to read the PDS and consult an xLife adviser if you are unsure.