Understanding Trauma Insurance and Differentiating It From Private Health Insurance


Trauma Insurance, also known as Critical Illness insurance, is designed to pay you a lump sum of cash if you are diagnosed any of the specified medical conditions such as a heart attack, stroke or cancer.

Trauma insurance could be the only thing to protect you from financial stress when you are suffering from a sudden health emergency or diagnoses such as cancer, kidney failure or bypass surgery. This insurance can save both you and your family from financial and emotional stress during a traumatic health emergency.


Trauma Insurance can financially help your family when you are diagnosed with a critical illness. Credit: Getty Images


Benefits of Trauma Insurance

One of the most essential benefits of Trauma insurance is that it enables you to access a lump sum amount upon diagnosis. When a health emergency occurs, your finances suffer the most (after your health) and the amount you receive from your policy can be a great help during this time.

Also, it’s likely the lump sum amount will be exempt from tax which means you may not have to include the received amount in your income for tax purposes. However, trauma premiums are not tax-deductible in Australia.

Trauma insurance is an insurance product that does not hold restrictions on how you can use your lump sum money. So, the money you receive from the cover can be used for any purpose you see fit, whether it is your medical expenses, debt, or just taking a holiday to relax and recover from the trauma.


Differentiating Trauma Insurance and Private Health Insurance

There is a common confusion between trauma insurance and private health insurance. When it comes to these two insurance covers, always remember one thing—they both aim to cover your health expenses, but their functioning is what makes the difference.

Private Health insurance is a simple and popular cover for your health. It covers the cost of your medical and surgical expenses. If you go through any private surgeries, you then make a claim to your insurer in order to cover the expenses. After the acceptance of the claim, the insurer directly deals with the hospital or reimburses you after you pay the bill.

On the other hand, trauma insurance is a defined benefit plan. It covers only specific, named diseases or illnesses. Upon diagnosis, you will receive the payment in a lump-sum, meaning you can receive your benefit while still actively working. You do not have to get hospitalised or bring the hospital bills to make a claim on your critical illness insurance.


Critical illnesses can impact anyone, including young families. Help your family financially by purchasing Trauma Insurance? Credit: Shutterstock


Private Health insurance does not allow you to use the benefit on whatever you want, but trauma insurance allows you to, which is one of the most significant advantages of getting trauma cover alongside private health insurance.

Private Health insurance is beneficial to anyone for financial security against the treatment costs incurred.

Depending on your age, health, etc. you can choose to either have one of private health insurance & trauma insurance, or both policies.

Trauma insurance is best suited to those who are likely at risk of being diagnosed with a critical illness. The choice depends on the costs and risks involved. Trauma with a basic private health insurance plan is a sound protective strategy.

If you are looking for trauma insurance in Australia, contact Aspect Underwriting, they offer fully transparent cover that provides greater certainty around the claim amount. Aspect underwriting covers 11 critical illnesses, including Cancer, Heart Attack, and Coronary Artery By-pass surgery.

Mike Wallis

Mike has over 25 years experience, having spent his first seven years working as a Broker at Jardine Lloyd Thomson in Melbourne and in 2002 was transferred to JLT’s Accident and Health Department in London. For four years (2002 – 2005) Mike was a specialist A&H Lloyd’s Broker and during this time developed excellent relationships with the Lloyd’s A&H underwriting fraternity. In 2006 he returned to Australia in a senior broking position with overall responsibility for Placement Strategy, including the implementation of underwriting facilities and the various authorities granted by Lloyd’s. Mike was the underwriter at two specialist Underwriting Agencies prior to founding Aspect Underwriting in 2016.