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Severity based insurance (SBI) pays upon degree of impairment and not the technical definitions of an illness; so it's worth a second look

Severity Based Insurance (SBI) is a more comprehensive high-grade alternative to the traditional 'all or nothing approach' to Crisis/Trauma and Income Protection insurance.

How is it different to traditional Crisis/Trauma and Income Protection insurance policies?

Read in this article

When you want more independent certainty about what your insurance covers

As a person's risks are combined and spread over a wider range of know risk issues, Severity Based Insurance (SBI) is deliberately structured to provide multiple claims for a broader range of medical issues. (There are approximately 160 ways to claim, not just the traditional 40 or so black and white options).

  • It uses lower thresholds for many conditions so an individual's ability to claim is often sooner providing financial help sooner for better outcomes.
  • Claims can occur earlier for partial disabilities and claims can be repeatedly made as a serious health situation escalates.
  • This is achieved by taking the medical view of measuring a person's whole body system and the 'degree of incapacity' rather than the traditional lottery 'black or white' approach that left many people exposed to not being sick enough to claim.

The new international Gold Standard

Severity based life insurance products are widely available throughout Asia, Africa, Europe and North America and are recognised as being an innovative insurance product which is more aligned to the evolving nature of modern medicine and health.

Severity Based insurance can become a useful alternative for many of today's hard-to-cover occupations and people with more complex health issues.

Taking a medical approach to assessing the severity of a condition

SBI follows a medical 'level of impairment' test and not the old subjective standard of 'in the opinion of a doctor, are you likely to return to work ever'.

This new level of impairment approach to assessing a claim means;

  • the ability to make multiple claims,
  • a higher likelihood of claim payments for partial conditions and disabilities and
  • early diagnosis claims.

Taking a medical approach to assessing a person's degree of physical and health impairment removes the fear of the insurance company Doctor Shopping at claim time, for a more commercially favourable medical opinion, and increases transparency to match the ways Centrelink disability assessments are conducted.

Jump to What's covered

Earlier claim payments

  • A key feature of SBI is the ability for people to access the financial benefits of the coverage during the initial onsets and lower thresholds of Crisis Health Events.
  • In practical terms, this means people are more likely to receive a claim payment for less severe health events which can still have significant financial consequences.

Payments for conditions not covered by traditional Crisis policies

  • An example of this may be Myelodysplastic Syndrome and other cancers that often are an initial indication of a more serious condition pending.
  • While traditional crisis and trauma policies cannot pay if their definition of cancer does not extend to this syndrome, SBI often can pay a claim under an independant medical disability assessment model rather than a definition-only model.

For the most serious conditions, SBI is designed to pay out the full sum insured, giving the peace of mind that you are covered.

Using a severity based insurance creates greater certainty when you need it - greater transparency about the claims assessment when you expect it.

So what's covered?

Taking a Whole Body System Approach

SBI usually classifies the body in terms of body systems rather than black and white sickness or injury approach where you might be sick but not sick enough to claim.

Crisis Health Events

  • SBI Crisis Health Events are usually divided into five major categories with higher benefit payments made for more severe conditions.
  • Death and Total & Permanent  Disability (TPD) is classed as the highest severity and all others on a lesser percentage basis.

An example of this body system approach and its underlying conditions can be better explained below by looking at the range of Crisis Health Events that can be claimed for.

Typical Crisis Events of Severity based insurance:


  • Solid tumour cancers
  • Lymphomas
  • Brain tumour
  • Leukaemia
  • Other cancers (e.g. aplastic anaemia, multiple myeloma)

author pic drew browneDrew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.

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