Life insurance and critical illness

Bundle life insurance and critical illness to get covered for more than just death.

It's not a pleasant thought to insure your death, but it's something Australians do in order to give their families a peace of mind.

If you are looking to cover more than just death you can take out what's known as critical illness cover. It's designed to payout a lump sum if you get diagnosed with conditions like heart attack or cancer. Not pleasant to think about, but it's worth considering when as part of your wealth protection plan.

Combining cover

You can take out critical illness insurance by itself or combine it with your death cover. See your options below:

Get a quote for life insurance with critical illness cover

Rates last updated February 24th, 2019
Name Product Maximum cover Maximum Entry Age Expiry Age Short Description
Get trauma insurance cover for 38 medical conditions including heart attack, stroke and coronary bypass surgery. Note: Check the PDS (Product Disclosure Statement) for full definitions of conditions.

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Coverage is the amount of money that you will be paid in the event of a claim. An insurance consultant can help you determine an appropriate amount. Calculator
Provides a lump sum payment if you become totally and permanently disabled and are unable to return to work.
Provides a lump sum payment if you suffer a serious medical condition. Cover can be taken out for 40-60 medical conditions depending on the policy you choose.
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What is a critical illness life insurance and its importance?

Critical illness insurance is designed to help manage your financial future should you suffer a serious illness or injury. Witnessing a family member suffer a serious medical event can be difficult, both emotionally and financially. If you suffered a stroke and were unable to return to work, how would your family cope with their everyday experiences without your income stream? Now couple those costs with the possibility of added medical expenses, rehabilitation costs and home modifications, and your families financial future would appear to be rather bleak.

Critical illness insurance is a type of life insurance cover that is designed to protect you in these situations. If you suffer a serious illness or injury, your critical illness insurance policy will offer a lump sum benefit payment to help you and your family cope financially with your changed circumstances. It offers peace of mind and an unmatched level of security.

What is the difference between critical illness insurance and trauma insurance?

Critical illness insurance and trauma insurance are actually the same, how the policy is labeled comes down to the insurer. If you suffer one of the medical events defined in your policy, such as a heart attack, major head trauma, cancer or a stroke, your trauma or critical illness insurance will give you a lump sum benefit payment.

Even though you may be in the best of health and believe trauma insurance is an unnecessary expense, things can go wrong at any time. One in three males and one in four females is diagnosed with cancer before reaching the age of 75, while heart attacks, stroke and other cardiovascular illnesses are the major causes of death among Australians aged 55 to 64.

But critical illness or trauma cover ensures that you can concentrate on recovering rather than having to worry about finances.

Common critical illness insurance features

The list of serious injuries and illnesses covered under a critical illness life insurance policy will differ from one provider to the next, but conditions generally covered include:

  • Alzheimer’s
  • Major burns
  • Blindness
  • Coma
  • Deafness
  • Dementia
  • Major organ transplant
  • Paraplegia
  • Quadriplegia
  • Heart attack
  • Stroke
  • Motor neurone disease
  • Loss of limbs
  • Major head trauma

This list typically covers somewhere between 30 and 50 trauma conditions or events.

There are no restrictions on how you use a payout from your critical illness insurance policy. However, it’s important to remember that a benefit is only payable if you survive. Each policy will require you to survive for a certain period of time after suffering your illness or injury before your benefit will be paid, usually between 15-30 days.

The advantages and disadvantages of critical illness insurance

Just like any other type of insurance cover, critical illness insurance has a range of benefits and drawbacks you should consider before applying for a policy. The main advantage of this type of cover is the peace of mind it provides. If you were to suffer a life-threatening illness or injury, you would enjoy the security of knowing you would be covered from a financial point of view. A wide range of illnesses and injuries are included in a typical critical illness insurance policy, and having cover in place ensures that you can concentrate on your recovery rather than worrying about your financial situation.

In addition, there are no restrictions on how you use your benefits payment. Trauma cover may actually increase your chances of survival by helping you afford to access the best possible treatment, while each policy comes with a range of options you can add to your cover.

However, some disadvantages of trauma insurance include the added cost exclusions mean that there are certain critical illnesses that will simply not be covered. Additionally, if you have pre-existing medical conditions or a poor health history, you can expect to pay more for your premiums.

How to compare critical illness life insurance policies

When comparing critical illness life insurance policies, make sure to take the following factors into consideration:

1. How much cover do I need? This is obviously a vital step in taking out cover. Take into account your dependents, your annual income and on-going expenses.

2. How long will I need cover? Are you looking to be covered well into the future or simply for a set period of time? Your answer to this question may influence your decision about whether to go for stepped or level premiums. Simply put stepped premiums refers to premiums that increase with each year of the policy, meaning that you pay a lot less in your younger years but a lot more when you get older. On the other hand, level premiums are fixed at the commencement of the policy and remain the same until the policy ends.

3. Compare quotes. Don’t jump at the first affordable quote that gets thrown your way. Look beyond the price factor in order to determine exactly what each policy does and does not cover.

4. Compare additional options. Look for additional options on each competing policy, such as a trauma reinstatement option or options for extra cover.

5. Read the PDS. Read each policy document closely before you apply for cover. Make sure you’re aware of the exclusions and limits that apply to every policy.

Is it possible to take out life insurance and critical illness insurance?

When taking out critical illness insurance cover, you can choose to take out a policy on its own or together with a life insurance policy. Deciding which option is best for you will likely depend on your personal situation.

While critical illness cover provides a lump sum payment if you suffer a serious illness or injury, life insurance offers a lump sum payment to your beneficiaries in the event of your death or diagnosis with a terminal illness. Life insurance is generally seen as a more important form of cover, though many companies will let you bundle your life insurance and critical illness cover together in one policy.

If you decide to take out separate policies, ensure that you have an adequate level of both life and critical illness cover in place. Speak to an insurance consultant to get expert advice tailored to your specific needs.

Things you need to know when getting critical illness life insurance

There are a few issues you should be aware of when taking out critical illness life insurance cover:

  • You will not receive a benefit payment if the illness you suffer results from a condition that was present at birth.
  • Certain illnesses, for example non-invasive skin cancers or HIV infection, will not be covered.
  • If you’re not in the best of health and have pre-existing conditions, it may be a good idea to check if your employer offers some form of critical illness insurance protection.
  • Employer-offered policies often offer guaranteed cover and may be a cheaper option for you than taking out a retail critical illness policy.

Why bundle life insurance and critical illness insurance?

Many life insurance policies offer critical illness cover as an additional option and choosing to bundle your cover in this way can have a host of benefits. Bundling policies can allow you to avoid being charged multiple fees for separate policies. You can enjoy paying less in insurance premiums overall and also enjoy the convenience of having all of your insurance cover contained in one easy-to-manage policy.

Critical illness life insurance: Frequently Asked Questions

Critical illness life insurance cover offers the peace of mind that comes with knowing you and your family will be protected financially if you suffer a serious illness or injury. However, in order to ensure you end up with the right level of cover, compare policy options and seek the advice of an insurance consultant.

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Richard Laycock

Richard is the Insurance Editor at Finder, wrangling insurance product disclosure statements for the better part of five years. His musings on insurance can be found the web including on Yahoo Finance, Travel Weekly and Dynamic Business. When he’s not helping Aussies make sense of insurance fine print, he is testing the quality of cocktails in his new found home of New York. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 certification in General Advice for Life Insurance.

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