Noel Whittaker
Noel Whittaker

Hard knock life? Trauma Insurance

IT IS one of the ironies of life that we take care to insure against unlikely events, yet ignore protecting ourselves from some of the most common and serious illnesses that can occur. Fortunately, there is now insurance available that pays a lump sum on the diagnosis of a serious illness - trauma insurance.

The good news is that most people recover from these illnesses and so, unlike life insurance, get to spend the proceeds of a policy while they are still alive.

Can you imagine what a difference a lump sum payment of say $100,000 could make to the life of a person who has just been told they are suffering a life threatening disease? It could alleviate the pressure of home repayments by paying out the mortgage, or at least by providing a buffer so that payments could be maintained. It could enable the partner to take time off work without pay during the treatment process, and also provide funds for additional medical costs or changes in lifestyle or occupation that may be caused by the illness.

It is also relatively inexpensive. For example, just $552 a year will cover a non-smoking 45-year-old male for $100,000.  In many cases, it is not possible to take out a trauma policy after age 55 but the cover remains in place until age 65, as long as the premiums continue to be paid.  On the expiry of the policy at aged 65, cover ceases and there is no residual value apart from the feeling of well being that comes from reaching retirement age in good health. The premiums are not tax deductible and the lump sum payout is generally tax-free.

Do you need to take out trauma cover? Naturally that is a matter for your individual circumstances but keep in mind that one in three men, and one in four women, will suffer from cancer before age 75. This is why trauma cover has become particularly  important for women - over 80% of all female trauma claims are cancer related.

To find out more, call your financial adviser or your insurance representative. It may be one of the most valuable phone calls you will ever make. Remember Private Health cover does not pay all of your medical and drug costs.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email:

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