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Income Protection or Trauma Insurance: which do you need?

Are you trying to decide which Insurance is right for you, but need to work within a budget? When it comes to Trauma and Income Protection Insurances – they are not quite the same.

To help you choose the right option for your needs, let’s have a look at what each policy covers generally. But if you have any questions, please don’t forget to talk to us: we can help you get the most effective cover for your budget.

Trauma Cover

Trauma Cover pays a lump sum if you get diagnosed with one of the specified illnesses and conditions (such as various types of cancer, heart attacks and other major illnesses) the policy offers cover for.

You don’t even need to have time off work to qualify for a claim, but the condition you suffer must be to the degree specified in your policy. For example, not every heart attack will qualify: it will depend on the severity.

An advantage of having the lump sum is you can use it for anything – perhaps to fund alternative medical treatments, or cover additional costs associated with your condition, such as travel to a hospital for treatment. You can decide how much trauma cover you would like; it is not linked to your income.

Income Protection

This is a regular monthly payment, and the cover level you can have is based on your income. You can’t insure more than 75% of your gross income (this will vary between companies, depending on whether they deduct your tax from the payment).

Unlike Trauma Cover, there is a wait period before you can claim under your Income Protection policy. This could be anywhere between four weeks and two years, depending on which option you selected when you signed on the dotted line.

However, Income Protection will pay you the insured amount monthly if you are off work and not earning an income, no matter what the illness or accident is; you just have to be off work for longer than the wait period on your policy. Income Protection is only available with most insurers if you are in paid employment for more than 30 hours per week.

Like to learn more about these (and more) types of covers? Always feel free to contact us; we will be happy to work with you to put together an Insurance plan that’s suited to your needs and goals.

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 development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek financial advice.

A full disclosure statement for each Insurance Link Adviser is available on request and free of charge.