Have you ever wondered what trauma insurance is, and how it works?

Trauma cover can be an invaluable part of your insurance cover, but it may be less well understood than some other types of personal insurance.

Research from the Financial Services Council showed that only 22 percent of people said they had trauma cover, compared to 98 percent of homeowners who had insured their homes.

So what is trauma insurance?

Trauma insurance is designed to pay a lump sum payment when you experience a specified serious health event. You might have also heard it referred to as critical illness cover.

It could be used help you get back on your feet more quickly, by providing funds to use for medical care and treatment.

How does it work?

Trauma policies pay out when a person experiences one of a set number of conditions, which are specified in the policy document.

A lump sum is paid and the person with the insurance policy can do what they need to with the money.

The amount that is paid is usually decided between the insured person and their financial adviser when the policy is first taken out, although the level of cover may be adjusted as the insured person goes through life, to make sure it remains appropriate.

What sort of conditions are usually covered?

Trauma policies can differ, but most cover things like serious heart attacks, loss of limbs, loss of sight, serious head injuries and some cancers.

There are usually about 40 different conditions that can be covered.

How do the payouts happen?

Instead of an ongoing stream of income that an income protection policy might provide, trauma insurance gives you a one-off lump sum.

You have total flexibility as to how the money is used. Sometimes, people use it to access drugs that are not funded by Pharmac. Other people use it to make adjustments to their homes if they need to make them more accessible to cope with a new health condition.  Others might just use the money to clear debt and spend time with their families, rather than having to return to work to have income coming in.

A trauma policy benefit can be used any way you like, which is often a real drawcard for this type of cover.

Trauma insurance helps recovery

Not having to worry about money at the time of a serious health event can be a major bonus.

When you have trauma insurance, you can focus on getting better.

When trauma insurance is part of a comprehensive system of cover, you’ll know that you have peace of mind that you’ll be able to cope financially even if life throws something seriously unexpected your way.

Most New Zealanders whose partner has a job do not qualify for much government income support, and having private insurance can make a big difference.

Want to talk?

If you’d like to talk about whether trauma insurance is right for you, or whether the amount of cover you currently have is appropriate, get in touch with us. We’re insurance experts and can explain what you need to know to get the most out of any trauma protection. We can help you look at your overall insurance picture and determine what the right strategy might be for you, for maximum peace of mind.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.