How trauma insurance can protect you when you suffer a stroke?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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, updated on November 25th, 2021       

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Suffering stroke can be a traumatic event that not only impacts your body but can also drastically shift how you operate in life. This can cause a disability that causes you to rely on others to carry out physical activities that you were once able to do, and it can impact your finances. Here is what you need to know when it comes to protecting yourself and your loved ones financially in the event of suffering a stroke.

What is a stroke?

A stroke is when the blood supply to the brain is interrupted. However, there are two ways in which a stroke can occur. The interruption of blood to the brain can be caused by an artery being blocked (ischaemic stroke), or when an artery bursts (haemorrhagic stroke).1 in 6 Australians are likely to suffer a stroke during their lifetime. The most common stroke people suffer from is an ischaemic stroke. According to the National Stroke Foundation, more than 500,00 Australians have suffered from a stroke between 2008-2017 which costs Australia $2.14 billion each year.

What is Trauma insurance?

Trauma insurance, which is also known as critical illness cover, is designed to provide you with a lump sum of money to cover immediate medical expenses or other financial expenses you will face after suffering a critical illness or injury. Conditions that you will be able to cover will vary from policy to policy, but the most common ones are a stroke, heart disease, heart disease, various cancers, or a heart attack. Checking with your insurer to see if they cover your critical illness or injury is important.

How much cover should you take out?

Trauma cover will vary based on your financial situation and your family situation. Therefore, speaking to a financial advisor or insurer can help you know what will be adequate for you. However, a few ways that you can know whether you have enough cover is:

  • Will it be able to provide immediate release of finances for your medical needs?
  • Will it be able to cover your mortgage expenses and debt?
  • Will it be able to sustain your current lifestyle?
  • Can it provide a financial buffer for your loved ones to take care of everyday living expenses and educational expenses?
  • Can it be sufficient enough to replace your partners' salary if they were to take care of you?

Limitations to be aware of

Not all trauma insurance policies are created equal. This means that you will have to read the fine print of your policy to check whether it is suitable for your needs. Looking at the premium rates, annual fees and ongoing fees of your policy are important. However, being aware of the payout time is essential. Some insurers will want documents to prove that what has occurred is a fact which can delay the process.

This aspect could be tricky if you are planning to make a claim before a diagnosis and sometimes after a diagnosis. Some insurer might decline your claim based on the medical evidence provided.