Does My Life Insurance Cover Continue If I Make A Trauma Claim?

What happens to your Life insurance if you have suffered from a medical condition and made a Trauma claim?

Here is an overview of how Trauma insurance works, and what happens if you hold a combined Life and Trauma policy.

What is Trauma insurance?

Trauma insurance covers you if you suffer a critical illness or trauma that impacts on your life. This can help pay off debts and treatment expenses, or even cover the costs of ongoing therapy.

It operates by providing a lump sum payout which can be used however the claimant chooses – whether by paying medical bills, supporting the family while the claimant is unable to work, or even taking a family trip.

Unlike Life insurance, which pays a lump sum benefit once the policyholder is deceased, Trauma insurance is intended to be paid to the insured whilst they are still living and is designed to assist when the trauma event occurs.

What is a trauma event?

Cardiovascular disease and cancer are two key examples of trauma events. According to the Heart Foundation, cardiovascular disease affects 4.5 million Australians. Figures from the Cancer Council reveal that three in 10 Australians died of cancer in 2023.

As well as cardiovascular disease and cancer, NobleOak’s Trauma insurance covers you for heart attacks, stroke, dementia, coronary bypass surgery, and 34 additional critical conditions.

What happens when you make a claim?

If you’re found to suffer from one of these conditions, then you will be entitled to make a claim on your Trauma policy. When a claim is made and the diagnosis is confirmed by your insurer, you will be entitled to receive the payout.

What are the benefits of Trauma insurance?

When Trauma insurance is combined with Life insurance, you can take out cover (NobleOak offers up to $2 million) to ease the financial burden on you and your family.

The benefit of this is obvious – at a time when you and your loved ones should be focusing on your recovery, you won’t have to worry about the ability to meet your financial obligations.

If the prognosis for your condition is poor, then you may even be able to use the payout to pay off the mortgage or improve your family’s financial position.

What happens to your Life insurance if you make a trauma claim?

There are different options available when taking out Trauma insurance. It can be either a “stand-alone” policy, or combined with Life cover.

If you have taken out a Trauma policy combined with a Life insurance policy and you’ve made a claim, the sum insured for your total policy will be reduced by the amount of the claim payout.

For example, if your total policy (Trauma and Life cover) is worth $2 million and you are paid $500,000, then your beneficiaries will only be entitled to up to $1.5 million at the time of your death.

Obtaining Life and Trauma cover

NobleOak offers Trauma and Life cover as separate or combined policies and can answer any product related questions you have. We are proud of the cover we offer and recently won the 2016 Strategic Insight Direct Life Insurance Overall Excellence Award.Talk to us to obtain a quote for the cover that best suits your Life insurance needs.

In the event you do need to make a claim on your policy, our dedicated client claims team is available to guide you through the process.

Sources:

Heart Foundation, Heart Disease in Australia, viewed 21 December 2016
Cancer Council Australia 2016, Cancer Facts and Figures, viewed 21 December 2016