Trauma insurance
Surviving a serious illness is more common than ever, but recovery takes time and money. Trauma insurance gives you a lump sum when you need breathing room most.
Trauma insurance, also called critical illness cover, pays a lump sum if you’re diagnosed with a serious condition listed in your policy, such as cancer, a heart attack or a stroke. You can use the money however you need, from time off work and treatment to paying down debt, even if you’re later able to return to work.
Reviewed by Kyle Hasson, Insurance and KiwiSaver Adviser (FSP1010252) · Updated October 2026
How we help
- Choose the right amount: enough to give you real breathing room.
- Compare definitions: which conditions are covered, and how, varies between insurers.
- Decide on structure: standalone or accelerated from your life cover.
- Consider extras: such as partial payments for early-stage conditions.
What does trauma insurance cover?
- Cancer, heart attack and stroke, which make up most claims
- Dozens of other listed conditions, which vary between insurers
- Some policies pay a partial benefit for less severe or early-stage conditions
The exact definitions matter a great deal at claim time, which is why comparing policies carefully is worth it.
Standalone or accelerated?
| Accelerated | Standalone | |
|---|---|---|
| How it works | Brings forward part of your life cover | A separate benefit |
| After a trauma claim | Your life cover reduces by the amount paid | Your life cover stays the same |
| Cost | Lower | Higher |
How much trauma cover?
A common starting point is enough to cover 6 to 12 months of household expenses, plus any treatment costs you’d want to fund and debts you’d like to reduce. Your adviser can help you balance this against your budget.
What conditions does trauma insurance cover?
The trauma policies we compare cover between about 45 and 60 listed conditions, each with a detailed medical definition. The main groups are:
- Cancer, the most common reason for a trauma claim.
- Heart conditions: heart attack, coronary bypass surgery, heart valve surgery, angioplasty and cardiac arrest.
- Stroke and other brain conditions, such as major head trauma, coma and benign brain tumours.
- Neurological conditions: multiple sclerosis, motor neurone disease, Parkinson’s disease and dementia.
- Organ failure and transplants: kidney, liver and lung failure, and major organ transplants.
- Loss of function: loss of limbs, sight, hearing or speech, paralysis and severe burns.
Definitions vary between insurers, and those differences matter at claim time. It’s one of the main things we compare for you.
Cancer is the most common trauma claim
In the year to March 2025, Partners Life paid $78.8 million in trauma claims, and cancer accounted for 60% of those claims (Partners Life, This is Partners Life 2025). Many people survive cancer today, but treatment and recovery can mean months away from work. A trauma payout gives you money to use however you need, without having to prove lost income.
Full and partial payments
Serious conditions pay your full sum insured. Many policies also make partial payments for earlier-stage or less severe conditions, usually 25% of your cover up to a set limit. Examples include early-stage prostate cancer, some carcinoma in situ and angioplasty on one or two arteries. After a partial payment, your remaining cover usually continues.
Stand-down and survival periods
- Stand-down period: most policies won’t pay for cancer, heart attack, stroke or some heart procedures if symptoms or a diagnosis come within the first 90 days (three months) of cover starting or increasing. Other conditions are usually covered from day one.
- Survival period: you generally need to survive 14 days after meeting the definition for a claim to be paid. If you have accelerated cover, your life cover pays instead if you don’t.
Cover for your children
Many trauma policies include children’s cover at no extra cost, typically up to $50,000 per child for a listed condition. Age limits vary by insurer, commonly from a few months old until around age 21 to 23. Some also pay a benefit if a newborn is diagnosed with a listed congenital condition.
Trauma, income protection or health insurance?
They do different jobs, and many families end up with a mix.
| Trauma insurance | Income protection | Health insurance | |
|---|---|---|---|
| Pays | A lump sum | A monthly income | Medical bills |
| Triggered by | Diagnosis of a listed condition | Being unable to work | Treatment you need |
| Need to stop working? | No | Yes, fully or partly | No |
| Covers mental illness? | Generally no | Usually yes | Some policies |
Can I claim more than once?
A standard trauma policy pays up to your sum insured in total. Some insurers now offer options that reinstate your cover after a claim, or let you claim up to four times for unrelated conditions, with waiting periods before you can claim again for related conditions. We’ll explain whether this is worth the extra cost for you.
How much does trauma insurance cost?
Cost depends on your age, health, smoking status, the amount of cover and whether it’s standalone or accelerated. Accelerated cover is usually cheaper because it’s linked to your life cover. Premiums rise with age and health changes can make cover harder to get later, so many people set it up while they’re young and healthy.
Kyle Hasson is an Insurance and KiwiSaver Adviser at Moneyplant in Papakura (FSP1010252), with a New Zealand Certificate in Financial Services (Level 5). Meet the team
This is general information only and isn’t personalised financial advice. Everyone’s situation is different, so please talk to one of our advisers before making decisions about your insurance.
Trauma insurance questions
Can’t see your question? Give us a call or send us a message. See our public disclosure for details of our fees and commissions.
What’s the difference between trauma insurance and income protection?
Trauma pays a one-off lump sum on diagnosis. Income protection pays monthly while you can’t work. They do different jobs, and many families have both.
Does trauma insurance cover mental health?
Most trauma policies focus on physical conditions. Mental health is more often covered by income protection, depending on the policy.
Does ACC cover serious illness?
No. ACC covers accidents only. Trauma insurance and income protection help fill that gap.
Can I claim trauma if I go back to work?
Yes. Trauma pays on diagnosis of a covered condition, whether or not you return to work.
Is trauma insurance worth it in NZ?
For many families, yes. Many people now survive conditions like cancer and heart attacks, but recovery can mean months off work and extra costs. ACC doesn’t cover illness, so trauma insurance fills a real gap.
Is trauma insurance the same as critical illness cover?
Yes. Trauma insurance, critical illness cover and critical conditions cover all describe a lump sum paid on diagnosis of a listed serious condition. Insurers just use different names.
Is a trauma insurance payout taxed?
Trauma payouts on personal policies are generally not taxed as income in New Zealand. Business-owned cover can be different, so check with your accountant.
Does trauma insurance cover mental illness?
Generally no. Trauma policies cover listed physical conditions. Income protection is usually the cover that pays if mental illness stops you working.
Can I get trauma cover if I’ve had cancer before?
Sometimes. The insurer may exclude cancer or related conditions, or offer cover after a set time in remission. Insurers view health histories differently, so it’s worth comparing.
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