Trauma Insurance or Recovery Insurance is a policy of insurance the will pay benefits in the event of a catastrophic injury or illness. Its purpose is to reduce the financial blow of these major medical problems.
There are no guarantees in life, and our health is at risk every day with respect to injuries and illnesses, which can come on suddenly, and without notice. If you do not have substantial savings to help you through the financial crisis resulting from a catastrophic illness, trauma insurance can help. The amount of insurance you purchase should be based on your current expenses and debts including mortgage, car payments, and student loans. The strategy is generally to provide enough insurance to enable you to maintain your current living status in the event that you lose part or all of your regular income due to illness or injury.
These programs often contain a lump sum feature that will provide the policyholder (or the policyholder beneficiaries in the event of death) directly a specified sum of money for certain types of catastrophic illnesses or injuries. It is common for such a policy to contain 20 or 30 listed causes, but your condition must be on the list for you to qualify for benefits. Some insurers will provide even more covered conditions so it pays to research these policies. Generally, it is recommended that you review plans from three different companies and make a comparison. Speaking with an agent or broker with experience in this type of insurance, and with people in your income bracket, is very important.
Trauma insurance plans may also have benefits for certain other conditions that pay a percentage of the stated value of the policy. Typically, these include diseases that become apparent in their early stages, and which can be treated.
Many plans contain ancillary benefits in addition to lump sum payments. There are automatic increases available to adjust for inflation or increases in your own income, and there are often benefits available for your children.
Trauma insurance is designed to compliment life insurance. Life insurance pays your beneficiaries only when you die. Trauma insurance provides benefits to you when you are alive, providing needed funds to maintain your life and get you through a very difficult time.
This coverage is often more expensive than life insurance policies, but that is primarily because there are more claims made on such a policy and the amount of claim dollars spent by insurance companies is generally higher with this coverage.