Trauma – (also known as critical illness insurance) provides a tax-free lump sum payment on diagnosis of a specified health condition. The number of conditions covered varies widely, cheaper policies often offering less benefit. Standard policies generally include heart attack, coronary by pass surgery, stroke and malignant cancer.

In most cases “accidental” types of traumas are covered immediately, although many insurers impose a waiting period (commonly 90 days after the policy is accepted) for certain illnesses.

The benefit on a trauma policy is paid to you when the diagnosis is confirmed – not when you die of the condition. This is important because it provides you and your family with a lump sum to use at your discretion, when it is needed most. It may be needed to pay for additional medical care, or perhaps to pay the mortgage and other debts or livings expenses to relieve the financial pressure on the household.

Trauma cover should not be held within superannuation but rather in your personal name because any trauma proceeds within super would be subject to preservation rules and you might have to wait until age 60 to receive the benefit.

This information is of a general nature and may not be relevant for your personal situation. Please call us on 03 9290 9200 to arrange a personalised consultation.

The material on this web site is only of general informational value. No person should act or refrain from acting solely on the basis of this material. It does not constitute professional advice of any nature and your access to this web site does not, of itself, give rise to a relationship of an adviser (in any form) and client.