Is trauma cover the same as income protection?

Ever thought about what would happen if you got sick and couldn't work? How would you pay your bills? And let's say it's not just a little flu, but a serious, life-changing illness. Would you be able to cover the medical expenses, pay your mortgage & cover all your other living expenses? 

Well, there are actually two kinds of insurance that can help you out in those situations. One is called income protection, which can give you a payout while you're off work. The other one is trauma (or also known as critical illness) cover, which can pay out a lump sum if you get diagnosed with a specific illness. 

But hold your horses, they're not the same thing! You gotta know the differences if you wanna understand how they work together. So, let's break it down together, shall we?

Income protection cover

You know what's worse than being sick or injured? Not being able to pay for groceries or your mortgage. Looking after yourself is important, but sometimes life happens and you might find yourself unable to work because of illness or injury. That’s where income protection comes in–it can give you a regular payment each month while you get back on your feet. 

Instead of stressing over bills while you're out of action, you can focus on getting better. You can choose a 90-day waiting period as opposed to the standard 30 days—but you'll need to have enough in your emergency fund to cover the loss of income during that time. Most people can get up to 70% of their income covered, plus superannuation, and the benefit period can continue up until the age of 65. And hey, one bonus is that your premiums could be tax deductible! 

Trauma cover 

So, picture this: you're living your best life when suddenly, bam! You get hit with a critical illness that requires serious medical attention. Cue the financial stress. That's where trauma insurance comes in - it's like a financial superhero that swoops in to save the day (and your wallet). The major difference between this type of insurance and income protection is that trauma cover specifies which illnesses and injuries are covered and the level of severity required. Instead of monthly payments, the payout is a lump sum which can be bundled with your life or 'death' cover. Just don't expect a tax deduction on premiums like with income protection—but the claim payment is usually tax-free.

What’s right for you?

Both these insurance types are valuable, and it’s very common for people to hold policies for each. There are a couple of different types of insurances that could really come in handy for you, but it depends on your own personal situation. We're not talking "one-size-fits-all" here, folks. Your insurance needs are as unique as your fingerprints. So, if you need a hand figuring out which policy is right for you, then have a chat with us so we can help weigh your options.