Critical Illness Insurance

What you need to know

• If you’re diagnosed with a serious illness that’s listed in your policy, critical illness cover will pay out a lump sum that is often tax-free.
• This cover option can be bought on its own, or combined with a life insurance policy.
• Each insurer has its own list of defined critical illnesses, so it’s best to shop around to see what conditions are included.

Compare critical illness insurance policies and get a quote

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.

Most critical illness insurance policies cover up to 50 different medical conditions including:

Stroke

Cancer

Heart attack

Critical illness insurance can either be bought as a standalone policy or bundled with your life insurance policy.

What does critical illness insurance cover?

Critical illness insurance insurance provides you with a lump sum benefit when you're unable to work due to a listed condition. These can include:

• Alzheimers disease
• Aortic surgery
• Aplastic anaemia
• Benign brain tumour
• Blindness
• Severe burns
• Cancer
• Cardiomyopathy
• Coma
• Coronary artery angiography

• Coronary bypass surgery
• Deafness
• Dementia
• Diplegia
• Encephalitis
• Hemiplegia
• Heart Attack
• H.I.V accidental infection
• H.I.V occupational acquired

• Kidney failure chronic
• Loss of limbs or eye
• Loss of speech
• Loss of independent existence
• Lung disease
• Major head trauma
• Major organ transplant
• Motor neurone disease
• Multiple sclerosis

• Out of hospital cardiac arrest
• Parkinson's disease
• Peripheral neuropathy
• Pulmonary hypertension
• Quadriplegia
• Stroke
• Terminal illness

Generally, this benefit is only payable should contract an illness which you're expected to survive. That's one reason why many people choose to combine their life insurance and critical illness insurance into one policy.

How much does critical illness insurance cost?

The table below offers some example quotes for critical illness from brands compared on Finder.

Policy	Cooling-Off Period	Monthly Premium*
BT Protection Plans	30 days	$75.14
MLC Insurance	14 days	$77.71
TAL Accelerated Protection	30 days	$85.80
Zurich Wealth Protection	30 days	$88.16
OnePath OneCare	28 days	$90.15
Clearview ClearChoice	30 days	$112.60
AIA Priority Protection	28 days	$114.29

*These quotes are based on a 35 year old male non-smoker living in NSW with $500,000 Trauma cover. Prices are only a general guide and are subject to change. For customised pricing, get a live quote on the Finder quote engine.

Speak to an insurance specialist to get tailored cover

What are the key features included in a critical illness policy?

Critical illness insurance is a policy that pays a lump sum in case of serious illness so that you can concentrate on recuperation instead of finances.

Common features include:

• Cover for common critical conditions and illnesses. Some policies have coverage for up to 60 different illnesses. If you receive a diagnosis you can begin the claim process.
• Access to specialist doctors or additional information. Some brands will also provide access to specialist medical personnel.
• Lump sum payment. This can range from $20,000 to $100,000 depending on the illness.
• Financial planning. Some brands will reimburse financial planning up to $5,000 so you can plan to use your lump sum payout.

What additional critical illness features can I take advantage of?

Additional features can be added that increase the benefits of the policy, such as:

• Wider range of coverage. At higher premiums, the range of covered conditions increases to include things like organ failure, HIV contracted through work, intensive care or loss of senses.
• Death benefit. A benefit payout of up to $5,000 may be awarded if there is a death within 14 days of suffering a critical condition.
• Insurance buy back. Insurance will be automatically restored to the original amount 14 days after making a claim and can be used for a second critical condition.
• Child support benefit. Added coverage for your children.

When does a critical illness insurance policy payout?

Some of the main requirements for a payout when it comes to critical illness insurance include:

• Diagnosis of a covered condition. The conditions covered are listed in the product disclosure statement (PDS) of your policy. You can either receive a full or partial pay-out, depending on the condition.
• Your diagnosis occurs after the exclusion period. This is typically after 90 days from when you first purchase your policy.
• You survive the illness through a defined period. This is typically set at least 2 weeks from when you are diagnosed with the illness.

_{Note: Check your PDS for the specific requirements of your insurer.}

So, is critical illness insurance worth taking out?

Critical illness insurance can feel like an added cost to a life policy, but having it could save you a lot of money in the future if you unexpectedly fall seriously ill.

It can help you keep your household in order while you are getting better from an illness or receiving treatment. This means you will be able to cover the costs of bills, childcare and groceries. It can also help you pay for expenses like mortgage payments or rehabilitation if you don’t have other coverage.

Essentially, critical illness insurance allows you to protect your assets if you are ill and unable to work. This is why its important to really think about how much cover you would need if you became unwell.

Pros and cons of critical illness cover: A summary

Pros

• Lump sum benefit paid for defined conditions
• Cover for up to 60 illnesses depending on the policy
• Free child cover is offered on some policies

Cons

• Exclusion period applies (usually 90 days)
• Survival period applies (usually 14 days)
• Not typically available through super

How is critical illness insurance different from TPD insurance?

While it may seem subtle, critical illness insurance and TPD insurance (total permanent disability) are two different types of policy.

	Critical illness insurance	Total Permanent Disability insurance.
What is the purpose of cover?	In the event of serious illness or injury, critical illness insurance pays out a lump sum that can be used by the individual to pay debts or medical bills, make home modifications or be used as an income.	A TPD policy pays out lump-sum benefit in the event of permanent disablement with the inability to return to work. As with critical illness insurance, the payout can be used for expenses or as an income.
Sum insured	Typically up to $5 million	Typically up to $10 million
Is death cover included?	Yes, with some brands.	Yes, with some brands.
Policy options	Inflation protection, premium freezing, financial planning and child support benefits.	Inflation protection, partial disability benefit, premium freezing, choice of premium structure and financial planning.
Option through super?	No	Yes
Pros	Combines well well with other plans and can include different premium structures. Covers a large range of medical conditions.	It's often possible to pay TPD insurance premiums from a superannuation plan.
Cons	Waiting period until the benefits can be used, an exclusion period, and premiums can be more expensive compared to other types of insurance.	There is a need to meet a specific definition of disablement in order to receive a benefit. Additionally all policies will convert to a modified status after the age of 65 or 70.

How much critical illness cover can I get in comparison to other life insurance benefits?

Benefit	Maximum sum insured
Death cover	$15 million
Total and permanent disability	$6 million
Critical illness	$3 million
Child critical illness cover	$300,000
Income protection	$50,000

Why you can trust Finder's life insurance experts

Frequently asked questions about critical illness insurance

• What is critical illness insurance?

  Critical illness insurance – also known as trauma cover – is an optional add-on to life insurance. It pays a lump sum if you get diagnosed with one of 50 serious medical conditions, such as cancer or a heart attack.

• How much does critical illness insurance cost?

  Finder research has found that critical illness could range from around $75-$115 per month, based on a 35-year-old male (non-smoker) living in NSW. For customised pricing, get a live quote on Finder's quote engine.

• Am I eligible for critical illness insurance?

  If you are aged between 16 and 65 you are able to apply for critical illness insurance. Each insurer will ask their own questions to assess your eligibility. You'll be asked about your health, lifestyle and your family's medical history and you may or may not have to undergo a medical test yourself.

• How much will my benefit amount be?

  It depends on the terms you agree on signing up for cover. Keep in mind that many critical illness policies will include an automatic increase in the benefit amount each year, to keep in line with inflation.

• What is a critical illness exclusion period?

  A critical illness exclusion period, also referred to as a qualifying or waiting period by some brands, is a time frame during which claims will not be paid. The period can begin from:

  • The start of your policy
  • The date you apply for an increase in coverage
  • The most recent state that the policy was reinstated

  An exclusion period is usually 3 months (90 days) but it can be as high as 6 months for some conditions. As an example, most types of heart surgery or stroke have a 3-month exclusion period, whereas forms of malignant cancer can have a 6-month exclusion period.

• What are some of the exclusions?

  Instances where benefits may not be paid include:

  • A claim being made within the 3–6-month exclusion period
  • An injury that is self-inflicted or the result of attempted suicide
  • If the sickness or injury started or was diagnosed before the insurance was purchased
  • Illnesses that do not qualify for benefits. Check your policy for a full list of covered illnesses

• What is not included in critical illness insurance?

  Your claim may not be eligible for payment is certain circumstances, for example if the condition is a result of a self inflicted injury, or if you have not applied for the cover personally, or an application is made on behalf of another person.

• Are there any restrictions on what I can use my insurance payout for?

  No. You can use it on whatever you need: whether that's to pay out your mortgage, meet the cost of medical expenses, or for anything else.

• Why might my claim not be accepted by an insurer?

  The core reasons for less illness claims not being paid out include:

  • Pre-existing medical conditions Many policies will not cover illnesses that arise from pre-existing medical conditions.
  • The exact illness is not covered. Most critical illness policies will have a set list of what conditions are covered. Make sure you check your product disclosure statement (PDS).
  • Non-disclosure. Your claim can be declined if you fail disclose a pre-existing medical condition.

• Is critical illness insurance tax deductible?

  Premiums paid for the insurance are not tax-deductible, however the benefits paid from a claim are tax-free. The reason for this is that in comparison to something like income protection insurance which replaces income, critical illness insurance pays out a lump sum and is therefore exempt from capital gains tax.

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