Critical illness (CI) insurance Australia
Critical illness insurance can cover you for a range of serious illnesses. See what you’re covered for, how it works and what you need to consider before purchasing.
Key takeaways
- Critical illness insurance provides a lump sum for specific serious medical conditions easing financial stress.
- Compare policies by maximum cover up to $2 million entry age and expiry age limits.
- Determine cover by assessing debts ongoing expenses and potential medical or rehabilitation costs.
What is critical illness insurance?
Critical illness insurance (also known as trauma insurance) provides you with a lump sum benefit if you suffer a serious medical condition. This payout can be used to ease your financial strain during an already stressful time for your family. The maximum available payout for critical illness insurance is $2 million.
Serious medical conditions typically include strokes, cancers, heart attacks and more. The exact conditions that are covered will be listed in the provider's product disclosure statement (PDS).
Critical illness insurance can be bought as a standalone policy or as part of a life insurance policy.
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What does critical illness insurance cover?
Critical illness insurance typically provides cover for the following illnesses:
- Cancers
- Coronary artery angioplasty
- Coronary artery bypass
- Heart attack
- Stroke
- Three vessel coronary artery disease
- Accidental HIV infection
- Alzheimer's disease
- Aplastic anaemia
- Bacterial meningitis
- Blindness
- Cardiomyopathy
- Chronic liver failure
- Chronic lung disease
- Coma
- Dementia
- Diplegia
- Heart valve replacement
- Hemiplegia
- Kidney failure
- Loss of hearing
- Loss of independence
- Loss of limbs or sight
- Loss of speech
- Major brain injury
- Major burns
- Major organ transplant
- Motor neurone disease
- Multiple sclerosis
- Muscular dystrophy
- Paraplegia
- Parkinson's disease
- Pulmonary arterial hypertension
- Quadriplegia
- Surgery to aorta
- Terminal illness
- Viral encephalitis
To be sure of what your policy covers, read the product disclosure statement (PDS).
How to buy critical illness cover
There are 3 things that make up the 'how' of buying critical illness insurance.
- Who you buy it from. Critical illness insurance can be purchased directly from the insurer or it can be purchased via a broker.
- What type of policy you buy. It can be purchased as a standalone policy or as part of a life insurance policy. It's worth considering both options to see what offers the best value for money for you.
- The way you pay for your premiums. Critical illness insurance can be paid for in two different ways:
- Stepped premiums: This option means your premiums will be recalculated every year at renewal time, meaning they'll typically increase each year. They will increase more and more as you age.
- Level premiums: This option means you'll pay a higher premium when you first take out the policy but increases aren't based on your age so they tend to happen more slowly over time.
Whichever you pick will determine the cost of your premiums both today and in the future so it's important to understand the pros and cons of stepped and level premiums.
What to look for when comparing critical illness policies
- Maximum cover: This ranges from around $50,000 to $2,000,000 so it's worth checking how much cover you need and which insurer can support this.
- Maximum entry age: It's worth comparing your options here because some policies have a maximum entry age as young as 54. Others have entry age maximums of 74 years-old.
- Expiry age: To know how long a policy can serve you, check what the expiry age is. For some policies, this is as young as 65. For others, it won't expire until you're 80 years-old.
- Funeral cover: Some critical illness insurance policies include cover for funerals too. This can be up to around $5000.
Our expert says
"It's wise to check what the cost of the standalone policy is in comparison to a life insurance policy that includes cover for critical illness. This is because you can be covered for a heap of extra benefits without having to dish out a whole lot of extra money. It's worth checking because there might be decent value for money in it."
FAQs
Sources
More resources on Finder
More guides on Finder
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How much does trauma insurance cost?
Everything you need to know about the cost of trauma insurance.
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How much trauma insurance do I need?
Trauma insurance pays out for specific health events, such as cancer, heart attack and many more. The costs of these events can vary widely, which makes it hard to find a sum insured that will suit every circumstance.