Introduction
While both types of cover help financially during serious illness or injury, they work in fundamentally different ways — and often serve complementary roles in a protection plan.
📈 Income Protection Vs Trauma Insurance Feature Comparison
Here's a high level overview of how they compare:
| Feature | Income Protection | Trauma / Critical Illness Insurance |
|---|---|---|
| Payout Type | Monthly income benefit | Lump sum payment |
| Purpose | Replaces income if you're unable to work due to illness or injury | Provides a lump sum upon diagnosis of a specified serious illness |
| Claim Trigger | Must be medically certified as unable to work | Must be diagnosed with a listed illness (e.g. cancer, heart attack) |
| Claims Admittance | 94% of individual advised claims are admitted | 86% of individual advised claims are admitted |
| Work Capacity Requirement | Must demonstrate loss of income or capacity to work | No need to stop working to claim |
| Payout Value | Up to 70% of income, recalculated at claim time | Fixed sum insured (e.g. $100,000, $250,000) |
| Policy Focus | Covers ongoing expenses like rent, bills, groceries | Covers one-off costs like treatment, travel, or time off |
| Tax Treatment | Premiums often deductible (outside super); benefits taxable | Premiums not deductible; payouts tax-free |
📝 Key Takeaways
- ✔️Trauma insurance pays a lump sum after diagnosis, regardless of work status.
- ✔️Trauma only covers listed conditions, not all illnesses or injuries.
- ✔️Income protection only pays when income is affected.
- ✔️Many people use trauma for immediate costs and income protection for ongoing financial stability.
Frequently Asked Questions
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