The cancer treatment gap no one talks about and how trauma insurance fills it

trauma
Written By Jam Villasanta

In 2025, a Melbourne family found themselves facing an almost impossible decision. Their insurer would not cover the cancer treatment that could save their mother’s life. The therapy was medically appropriate and available in Australia, yet it sat completely outside both Medicare and private health coverage.

So they started talking about selling their home to try and pay for it.

This story captured national attention because it revealed something most Australians do not realise: the biggest medical costs are often not the ones we expect. And in those moments, trauma insurance can be the cover that keeps your options open.

When a treatment exists but funding does not

In August 2025, ABC News profiled the story of Zohreh Sajjad, a Melbourne woman diagnosed with lymphoma. Her specialist recommended CAR T cell therapy, a cutting-edge treatment with potential to put her cancer into remission.

But the price was staggering.

The cost: more than 600,000 dollars.

Her private health insurer refused to cover the therapy, not because it was “experimental”, but because her specific policy required an MBS item number for medical benefits to be paid, and CAR T does not have one. As per the conditions of her policy, no MBS number meant Medibank could not pay a medical benefit for it.

“Because a Medicare benefit is not payable for this service, Medibank is unable to pay a benefit.”
— (ABC News, 2025)

This case highlights a practical gap many Australians do not know about.

Some cancer treatments fall outside Medicare, and depending on the product design, a private health insurance policy may or may not cover treatments without an MBS item number. In this situation, the combination of no Medicare benefit and the wording of her PHI policy meant the treatment was not funded.

Why Medicare does not cover some cancer treatments

CAR T cell therapies do not run through the normal Medicare or PBS pathways. They sit under the Highly Specialised Therapies (HST) framework, which is jointly funded by state and federal governments, and administered through public hospitals.

Because CAR T is not billed through the MBS, private health cannot legally mirror its funding, leaving a funding gap for many patients.

The Department of Health explains it clearly:

“Highly specialised therapies and services are implemented through a dedicated framework outside of standard MBS and PBS processes.”
— (Department of Health, 2024)

This is why private health insurers cannot step in, even when a therapy is recommended by the treating specialist.

Where trauma insurance fits in

Trauma insurance pays a tax-free lump sum when you are diagnosed with a serious medical condition listed in the policy. It is not tied to hospitals, item numbers, or treatment codes. It simply pays money to you.

This lump sum can be used for:

  • treatment in public or private hospitals

  • overseas medical care

  • medications not on the PBS

  • accommodation and travel for your family

  • replacing lost income

  • paying a mortgage during treatment

  • funding any out of pocket component

MoneySmart explains it simply:

“Trauma insurance pays a lump sum if you are diagnosed with a major illness or injury.”
— (MoneySmart, 2024)

That is the key difference. While Medicare and private health can only pay for specific parts of cancer treatment, trauma insurance pays you, so you can direct the money where it matters most.

Does trauma insurance cover lymphoma?

Yes. Lymphoma is typically included under the Cancer definition in major trauma insurance products, subject to the wording and staging requirements in each PDS.

“Cancer is one of those.”
— Phil Thompson, Skye Financial Adviser

This means a trauma claim can be paid before, during, or without chemotherapy or hospitalisation, depending on the definition and severity.

Claims reality: Do trauma claims actually pay?

Consumers often assume life insurers do not pay claims. The data shows the opposite.

The Financial Services Council reports that 58 percent of trauma claims are for cancer, making it the most common trauma claim category in Australia.

APRA and ASIC jointly publish the Life Insurance Claims and Disputes Statistics, which consistently show high acceptance rates (how many trauma claims are accepted and paid out) for trauma insurance claims.

“Trauma can be one of the quickest insurances to pay out.”
— Phil

These real-world numbers matter because cancer is becoming more common among younger Australians.

“We have had seven cancer Trauma claims since July 2023.”
— Kathleen Dean, Skye Financial Adviser

Cancer trends for Australians under 45

According to AIHW projections, Australia is expected to see around 209,000 cancer diagnoses by 2034, an increase of about 23 percent from 2024.

More cancers are appearing in people aged 20 to 45, driven by earlier detection and changing risk patterns.

This demographic is where cancer treatment timelines collide with mortgages, young families, study debt, and limited savings.

What trauma insurance can offer beyond treatment

Trauma insurance does far more than cover treatment costs. It helps with all the life admin that cancer disrupts.

Examples include:

  • moving closer to family or the location of treatment

  • getting a full time carer

  • taking six months off work

  • flying a parent interstate for support

  • covering rent, mortgage or other expenses during recovery

  • helping a partner reduce their work hours

“Trauma is not… you do not need to have stopped working to make a claim.”
— Phil

This is a critical distinction. You can still be working, still earning, and still receive a trauma payout.

What about TPD, income protection or terminal illness cover?

People often assume these types of insurance automatically pay for cancer.

Here is the reality:

Income Protection

  • Pays if you cannot work due to illness or treatment.

TPD Insurance

  • Pays only if two independent doctors agree you will never return to work.

Terminal Illness

  • Pays if a doctor states you are likely to die within 12 to 24 months, depending on the policy.

  • Trauma insurance stands apart because it:

    • pays early

    • does not require stopping work

    • does not require permanent disability

    • does not require terminal illness

    • is diagnosis-based, not prognosis-based

The residency question: Do non-permanent residents qualify?

Many Australians on temporary visas assume life insurance is off-limits.

Most trauma policies do accept non-residents if they live in Australia, but with restrictions around overseas treatment, claims assessment, or future domicile.

Zurich summarises it clearly:

“Policies are designed for Australian residents and rights may be restricted if you become a resident elsewhere.”

The key is to check residency notes in the PDS or ask an adviser early.

Overseas treatment options and using trauma to choose

In the ABC story, one of the medical specialists suggested travelling overseas for treatment because costs could be lower and availability higher.

Trauma insurance gives you the financial freedom to choose that path if you want to.

Trauma payouts can be directed towards:

  • flights

  • accommodation

  • overseas clinical care

  • extended stays for family

  • immediate payment to secure treatment slots

This is exactly the flexibility that Medicare and private health insurance cannot provide.

Key takeaway

Australia has one of the best public health systems in the world, but it does not cover everything.

Some private health insurance policies can only pay for treatments with an MBS item number.

Cutting-edge cancer therapies frequently sit outside that structure.

Trauma insurance fills this gap by giving people money at the moment they need flexibility the most.

For Australians in their 20s to 40s, understanding this difference is not about fear. It is about strategy. Trauma insurance can be the circuit breaker that stops a health crisis from turning into a financial one.

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Jam Villasanta
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