Stand-alone or accelerated?

How to choose the right Trauma cover

Trauma cover is one of the most powerful – and often misunderstood – types of Insurance.

As you may have heard before, it’s designed to pay a lump sum if you’re diagnosed with certain serious conditions. What you might not know, however, is that there are two ways to structure it; ‘Stand-Alone’ or ‘Accelerated’.

Depending on which option you choose, costs and claims will vary. So what’s right for you? Let’s look at the differences to find out.

Stand-Alone Trauma

If you select a stand-alone benefit, your claim will be paid out as a lump sum without reducing the cover amount on any other Insurances you may have.

In other words, if you take out Life Insurance and Trauma Insurance as a separate (stand-alone) policy, a Trauma claim won’t reduce the amount of the Life Insurance cover you have.

If you’re looking for a more comprehensive level of coverage, Stand-Alone Trauma may be for you. However, bear in mind that the stand-alone benefit option usually costs more than its ‘accelerated’ counterpart.

Accelerated Trauma

You can choose to bundle your Trauma Insurance with your Life Cover. By selecting the accelerated benefit option, the amount of the Trauma claim will be deducted from the Life cover of your policy.

For example, if you have $700,000 worth of Life Insurance cover and claim $200,000 of Accelerated Trauma, you will have $500,000 left in your Life Insurance policy. But don’t worry: there are ways to restore the original level of coverage (we’ll come to that in a moment).

Premiums are usually more affordable with Accelerated Trauma, which makes it a good option if you’re on a budget.

How to restore your cover

Did you make a claim on your Accelerated Trauma Insurance? Twelve months after your claim (or even six months, for certain conditions), you may be able to buy back the amount of Life Insurance cover that was reduced.

As for your Trauma Insurance cover, normally it’s only possible to claim once – unless you add a ‘reinstatement’ option to your policy. In that case, twelve months after your claim, you should be able to purchase Trauma cover again.

Stand-Alone or Accelerated Trauma? Not sure which is right for you? As you’ve seen, both options come with pros and cons. The choice depends on your budget and the level of coverage you want. But if you choose the accelerated benefit, make sure it doesn’t compromise the amount of Life Cover you need: it’s about protecting your family’s future.

Once again, keep us in mind. We can help you understand your options and tailor your policy to suit your needs.

An Adviser Disclosure Statement is available free and upon request.