How Much Trauma (Critical Illness) Cover Do You Actually Need?

Trauma cover (also called critical illness cover) pays a lump sum if you are diagnosed with one of the serious conditions listed in your policy, such as cancer, a heart attack, or a stroke. There is no single “right” amount — the question is really what you would want that lump sum to do for you and your family if the worst happened.

What is trauma cover meant to pay for?

Because it pays a lump sum you can use however you wish, trauma cover is flexible. People commonly think about clearing or reducing a mortgage, covering time off work for themselves or a partner, paying for treatment or recovery costs that are not otherwise funded, or simply buying breathing room so that money is one less worry during a difficult time.

How do people work out how much to insure?

A practical approach is to add up what you would want the money to cover — for example a chunk of your mortgage, a year or two of living costs, and a buffer for medical and travel expenses — rather than picking a round number. For higher earners with larger commitments, the figure that provides genuine peace of mind is often higher than a rule of thumb would suggest.

How does trauma cover differ from income protection?

They solve different problems. Income protection replaces part of your income over time while you cannot work, whereas trauma cover pays a one-off lump sum on diagnosis, regardless of whether you keep working. Many people hold both because they do different jobs, and a lump sum can be useful for one-off costs that an income stream does not easily cover. Our overview of the different types of cover explains how they fit together.

Should the amount change over time?

Yes — what you need usually shifts as your life does. A growing mortgage, young children, or a higher income can all point to more cover, while a paid-down mortgage and grown children may mean you need less later on. Reviewing the amount every few years, or after big life changes, helps keep it matched to your situation rather than to the life you had when you first took it out.

What should I check before relying on it?

Trauma policies differ in which conditions they cover and how those conditions are defined, so two policies with the same dollar amount are not necessarily the same. It is worth understanding what is and isn’t included, any stand-down periods, and how the cover behaves after a claim. An adviser can help you compare the detail, not just the price.

If you would like help working out a trauma cover amount that fits your situation, you are welcome to get in touch — and our article on keeping trauma cover in your 50s looks at how needs change later on.

The information in this article is general information only and is not intended as financial, medical, health, tax or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist in relation to your own circumstances and before acting on this information.