What's the difference between trauma insurance and life insurance?

Trauma insurance (also called critical illness insurance) and life insurance cover different events entirely. Life insurance pays when you die or become terminally ill, while trauma insurance pays a lump sum immediately upon diagnosis of a serious medical condition listed in your policy, regardless of whether you survive or return to work. In Australia, trauma insurance typically covers around 40-50 conditions including cancer, heart attack, stroke, major organ transplant, kidney failure, loss of limbs, and severe burns. The crucial difference is that trauma insurance supports you during recovery while you're alive, helping cover medical bills, rehabilitation, experimental treatments not covered by Medicare, mortgage payments during time off work, and home modifications. You can have both life insurance and trauma insurance simultaneously, and many Australians do. For example, if you're diagnosed with cancer, trauma insurance pays immediately to help with treatment and recovery costs, while life insurance only pays if you die. Trauma insurance is particularly valuable for conditions where you may fully recover and return to work, unlike TPD which requires permanent disability. Premiums for trauma insurance are typically higher than basic life insurance due to the broader range of claimable events.