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Trauma Insurance

Trauma Insurance

Helping to protect you and your family

What is Trauma Insurance?

Trauma Insurance, (or critical illness cover) pays you a one-off tax-free benefit if you are diagnosed with one of the 50 plus critical events (including cancer, heart attack and stroke) that meet policy definition, and you must survive for 14 days after diagnosis. 

If you don’t survive, there is no pay-out. For this, you will need life cover.

trauma insurance covers critial illnesses

Do I need trauma insurance?

Trauma insurance is designed to offer financial support, if you fall ill with a critical disease or injury and need time off for hospitalisation, rehabilitation and to recover with the care of your family or partner. 

You can spend the non-taxable income as you like. Most often people use the money for private medical care and treatments or a holiday. 

Many insurers also include a free critical illness kids cover.

Private health cover is slightly different because the policy pays for medical procedures, treatments and that the private health system offers. 

A critical illness policy pays you a one-off tax-free cash to spend how you like and can pay for:

Are you eligible for trauma insurance in NZ?

To get cover, you must be:

  • a citizen or permanent resident of New Zealand and currently residing in New Zealand
  • Work-visa holder
  • Aged between 2 and 70

Preparing for a for a serious disease

Being diagnosed with a critical or dreadful disease often brings with it severe economical implications related to paying for the health care treatments, medical procedures and possibly the loss of income.

All too often we hear of someone being diagnosed with a disease or malignant tumour

Managing stress during such a time is important and having family and friends to care and support you during such a stressful time cannot be measured in dollars.

Most insurers offer a special Counselling Benefit, which covers the cost of Psychiatrist or Psychologist consultation and counselling for you and/or your family.

You need to understand all your economic resources and options. Our insurance advisors have all the expertise and are only a phone call away.

It’s beneficial to have your legal documentation in place such as enduring power of attorney, last will and testament, before or immediately after diagnosis.

What does a trauma policy in New Zealand cover?

You can tailor your insurance cover to suit your needs. Your choice of cover will impact how you can claim. You can choose all types of cover, or two or just one. It’s up to you.

 

The most common critical disease cover is designed to pay a one-off lump sum if you suffer from one of more than 50 defined medical conditions. Early payments apply for over 15 significant but non-life threatening conditions.

Major or Severe cover is a more cost effective cover in that it covers only the more serious illnesses. 

If your illness isn’t considered major but you’re eligible for the trauma benefit, your Major/Severe benefit will remain in place to keep you covered for all major conditions – including those that relate to your Trauma Recovery benefit claim.

Trauma Multi Cover or Progressive Care can pay out more than once.

You’ll receive a lump sum if you suffer a covered serious illness (think heart attack, cancer, or stroke) or a life-changing physical injury (just like regular Trauma cover). The more serious it is, the bigger the payment.

If you experience another unrelated event covered by the policy down the track, you’ll receive a further lump sum (this can happen up to four more times).

About two-thirds of all serious illness claims in New Zealand are for cancer. Cancer cover pays you a lump sum of money if you’re diagnosed with cancer to help you recover physically and financially.

Which type of trauma insurance is best for me?

You can combine comprehensive cover, -major, -multi and cancer cover as you see fit. 

You can select between:

  • Additional cover, also known as standalone cover

    The trauma payout will not reduce the life cover amount.

  • Combined cover, also known as accelerated cover

    Means you’re insured for a payout and the claim paid is deducted from the life cover amount on your policy.

    The combined trauma payout cannot exceed the life cover amount on the policy.

    An optional extra is trauma reinstatement or buyback which reinstates your disease cover after you’ve claimed so that you can claim again.

    The condition leading to the claim will no longer be covered and you need to wait 12 months after the claim is paid before the reinstatement may be exercised.

  • Trauma Cover for the Family

    The insurers LifeCovered compares offer free trauma cover for children as part of the parent cover.

    Financial hardship can easily arise during an already difficult situation, when a minor is diagnosed with a critical condition or has a medical crisis when bills and medical procedures hit the family finances.

    The costs and needs for the child and the parent are different, but with the right financial support and treatment, the family can focus on recovery and getting well.

    Trauma cover for children as part of the parents cover is possible and is usually free with a $50K cover (higher cover is possible for a cost) or the youngster can have a separate cover in place.

Cover details

What’s covered?

  • You’re covered if you’re diagnosed with a critical illness that meets policy criteria. See policy for details
  • Various insurers offer free Children’s cover

What isn’t covered?

  • Suicide
  • if you die within 14 dies from diagnosis – no payout
  • If the medical crisis being claimed for was directly or indirectly caused by an intentional self-inflicted act, whether sane or insane.

Each insurer offers special built-in policy advantages. Most are similar across the board, however some of the key benefits are unique. Here are some of the most common ones.

Your Trauma Cover is valid wherever you may be in the world

At claim time, you can get help with money matters and legal advice. The benefit is usually $2.500 – this is a one-off payment.

There are a number of special events which can trigger a need to increase your Trauma Cover. The Special Events Increase Benefit allows your Trauma Cover sum insured to be increased (certain restrictions and limits apply) without further health assessment for the following special events:

Allows you to reinstate your level of cover under your original policy, without having to provide further medical information following a claim, so that, you can claim it again, for unrelated medical events.

Which diseases are covered?

The comprehensive critical illness cover available in New Zealand often cover around 50 + conditions listed on their policy documents – it’s always important to read these before taking cover out.

Similar policies from banks usually cover between 15 – 25 conditions.

The specific conditions covered depends on the individual insurer and the type of cover you take out. You can expect the same essential conditions to be included, such as:

  1. Cancer
  2. Heart attack
  3. Stroke

Trauma (critical illness) Cover explained

Recognising that due to medical advances his patients were surviving illnesses they would previously have died from, Doctor Marius Barnard witnessed first hand the financial impact survival had on the patients and their families.

A young divorcee, age 34 with 2 young daughters came to see Doctor Marius Barnard. 

The x-rays and biopsy confirmed the diagnosis of lung cancer – a malignant tumour – and after they removed her lung she went home 5 days later.  And 3 weeks later, she was back at work. 

Approximately 2 years after the operation, she came back to see Dr. Barnard at his consultation. She was dying, pale, exhausted, had lost much weight – skin and bones, gasping for breath and in terminal stages of cancer. 

The lady had come from work because she needed the money to provide for her daughters and herself. 

Unfortunately, she died a few weeks later. And when she was buried, the life cover paid out. 

Would it not have been better, that she would have had the money when she was diagnosed with a terminal disease?

Instead, she worked until she died.

How much does trauma cover cost?

About 2/3 of all the people that sign up for life cover with LifeCovered also add trauma insurance to their policy. The factors that influence the costs of cover include:

Multi-benefit discount
With two or more insurances you’re eligible for a special discount. 

Your health and medical history
We work for you to get claims paid and that’s why the upfront approval process is so important. The insurers may want to have a look at your medical history to figure out how at-risk you are of becoming sick, and the offer for cover, the insurers present will reflect this.

Your job 
Some occupations carry a higher risk than others and might mean you have to pay more each month.

Do you smoke?
Smokers pay more for financial protection.

How our claims process works

If you need to claim, we’ll make sure it’s a smooth process

You can make a claim online or by calling 0800 25 99 25

Expert Assessment

Our claims experts will deal with the claim quickly, communicating clearly with your or your family throughout the process. 

Paying your claim

Once the claim is approved, the insurer will pay a tax-free one-time benefit directly to your family or estate.

Most common trauma insurance claims in New Zealand

There are about 50 conditions and procedures that qualify as a critical illness. One insurer cites the following as the most common causes for claims.

The Top 3 claims:

  • Cancer 61%
  • Heart Attack 9%
  • Stroke 8%

Frequently Asked Trauma Insurance Questions

Accelerated Trauma example:

Alan buys a $500k Life cover policy with a $200k Accelerated Trauma cover included. He makes a successful claim because of a cancer diagnosis and gets paid out $200k. Remaining Life cover amount in place is $300k. 

Standalone Trauma example:

Jenny buys a $500k Life Insurance cover and a $200k Standalone Trauma cover. She makes a successful claim because of a benign tumour of the brain and gets paid out $200k. The full Life cover cover of $500k is still in place.

There are a couple of options or scenarios available.

Trauma insurance buy-back benefit is a special add-on. Sort of like a menu at the restaurant. If you’d taken a meal of the menu – you cannot get the same meal one more time. You can still get all the other item from the menu.

Option 1:

John claims because of a cancer diagnosis and gets the full amount paid out. When John took out the policy he decided not to buy the extra “Trauma buy-back” optional add-on.

Therefore he can only claim once – he can only get one meal of the menu.

Option 2:

Alan bought trauma cover incl the optional buyback benefit. And when he was diagnosed with a heart attack, his trauma cover was automatically re-instated. 

Giving Alan another change to claim towards his policy. He had another opportunity to get a meal from the menu – just not the same one, one more time.

Changing cover during policy term is pretty straight forward and especially so if decreasing the cover. 

The insurers LifeCovered compares (AIA Insurance, Asteron Life, Fidelity Life and Partners Life) all require a form to be filled in and signed.

If for some reason, you are wanting to increase the cover, this is possible and there are mainly two options:

  1. Special Events Increase:
    Lets you increase your amount of cover whenever a special event occurs in your life. Special events include getting married, having children, taking out a mortgage or getting a pay rise.

  2. Getting approved for more cover.
    The process in getting you approved for more cover is answering health, lifestyle and occupational questions. We can do that online, face to face or over the phone.

The survival period is the number of days you must survive, following the diagnosis of a covered critical illness, before a benefit is payable. Is you have accelerated trauma cover this requirement is not applicable.

Trauma insurance benefit is paid if the insured person survives at least 14 days from the date they:

  1. are first diagnosed with one of the serious medical conditions listed in the policy document, or
  2. undergo one of the major surgeries listed in the policy document

For trauma insurance to pay out you must survive 14 days after diagnosis. That’s why we recommend as a minimum always life cover with added trauma cover.

Trauma insurance in New Zealand is a tax-free benefit. Under New Zealand tax laws, you do not pay any income tax on any life insurance payment you receive. 

Terminal Illness cover is different than trauma or critical illness cover, and is a built-in benefit with all the insurers in New Zealand, we compare. It means your insurer pays you the life cover amount, if your doctor has confirmed you have a terminal condition and you are likely to pass away within 12 months.

Trauma cover was designed to provide money and financial support following a critical disease.

The observation was that life cover would pay money to the family following the death of the policy holder, and income protection would pay a salary if the policy holder cannot work anymore.

The concern was however, that due to the progress of modern medicine, patients would survive many years after the treatment of cancer, heart attack or stroke. But financially they’d be going through hardship or experiencing bankruptcy.

The trauma payout would provide a tax-free one-time benefit or a financial security during the most traumatic period in the policy holders life to finance, most commonly a year or two at home. Time spent on surgical procedures, treatments, funding medication and recovery.

So how much trauma cover do I need?
Aa good rule of thumb is once or twice your annual income.

The insurers we work with offer maximum freedom of choice. And most often trauma cover is added to a life insurance policy as it provides most value for money. You may also get a standalone trauma cover.

Life cover pays out if you become terminally ill or die. And trauma Insurance pays out if your are diagnosed with one of the 50 plus defined medical conditions listed on the policy document. 

Combining Life and Trauma cover therefore covers more and you’d be surprised to see how cheap the extra cover is.

Looking for more cover?

Here are some other ways to help protect your family’s future.

Trauma insurance pays out if you are diagnosed with a critical illness and the family support is important

Life cover includes some extra free benefits such as terminal illness cover (where life expectancy is less than 12 months). Trauma and Life Cover provides better support for you and your family.

family support during trauma

Health Insurance, sometimes called medical cover pays for medical and surgical procedures. Gives quick access to the private health system.

Everyday New Zealanders are diagnosed with a life altering sickness

Income Protection replaces your lost income if you cannot work because of an injury, accident or sickness. The money can be used to keep your lifestyle going and helping family members.

Brochures

Check out the brochures from AIA, Asteron Life, Fidelity Life and Partners Life are included here.

Policy documents

See a full list of what’s covered in the trauma insurance policies for AIA, Asteron Life, Fidelity Life and Partners Life are included here. 

1) The AIA Living Umbrella wording is common to all AIA Living policies.

2) Asteron Life has all it’s personal insurance wording in one document.