Terminal illness insurance

What is terminal illness insurance?

Terminal illness insurance is a type of life insurance policy that pays out if you're diagnosed with a severe illness you aren't expected to recover from within a certain time period (often 12 months). Examples of such diseases can include advanced cancer or heart disease. Generally, you'll be eligible for terminal illness insurance unless you have a linked pre-existing condition that may shorten your life.

The payout from terminal illness cover is designed to help with any end of life care you may require, as well as any preparations you may want to make before you pass away.

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Name	Product	Optional TPD Cover	Optional Trauma Cover	Maximum Cover
NobleOak Life Insurance Finder Award	$15,000	$5 million (maximum cover)		$25 million	Our verdict: Finder Life Insurance Award winner for the last 5 years in a row. Good value for money, simple application process and a high claims acceptance rate. ⭐ Current offer: Get one month free for a limited time - apply by 21 December 2023. Offer T&Cs on insurer website apply.	Get Quote View details	Compare	loading Fetching your data...
TAL Accelerated Protection Life Insurance Finder AwardBonus	$25,000	$3 million (maximum cover)		No set limit	Our verdict: One of Australia's leading life insurers. Automatically includes child critical illness cover. Plus, it comes with a level premium option (e.g. costs remain similar as you get older). ⭐ Current offer: Get up to 15% off your TAL Life, Trauma or TPD insurance policy for life - if you have a Body Mass Index (BMI) between 19 and 28 at the time of your application. Offer T&Cs on insurer website apply.	Get Quote View details	Compare	loading Fetching your data...
Medibank Life Insurance	$15,000	$1.5 million (maximum cover)		$2.5 million	Our verdict: Medibank offers a higher payout limit ($2.5 million) than 15 other providers. Get a 10% discount if you're already a Medibank Health Insurance member.	Get Quote View details	Compare	loading Fetching your data...
ahm Life Insurance	$15,000	$1 million (maximum cover)		$1.5 million	Our verdict: ahm offers a simple application process. You can be approved online or over the phone. There are no medical or blood tests required.	Get Quote View details	Compare	loading Fetching your data...
RAC Life Insurance Bonus	$15,000	$5 million (maximum cover)		$25 million	Our verdict: RAC’s maximum death cover limit of $25 million is one of the highest limits you’ll find, including $5 million in TPD insurance. You can get an online quote, but you’ll need to call RAC to get trauma cover. Benefit from added peace of mind with fully underwritten insurance.	Get Quote View details	Compare	loading Fetching your data...
Real Family Life Cover Bonus	$10,000	$1 million (maximum cover)		$1 million	Our verdict: The application is simple; it can be done with 1 phone call and there are no medical exams. But households with larger debts may need more than a $1 million payout. ⭐ Current offer: Get back 10% of the premiums you’ve paid after 1 year.	Get Quote View details	Compare	loading Fetching your data...

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When will life insurers pay out terminal illness benefits?

_{Data taken from brand product disclosure statements on August 2022. Benefits, conditions and amounts are subject to change at anytime.}

What’s considered a terminal illness?

To be eligible for a terminal illness payout:

• You must be medically certified, by 2 registered medical practitioners, jointly or separately, as having a terminal illness that is likely to result in your death within 12 or 24 months.
• 1 of the registered medical practitioners must be a specialist practicing in an area related to your illness or injury.

What can I use a terminal illness benefit for?

There are no restrictions on how you can use a terminal illness benefit. While a large portion of the proceeds will most likely go towards providing for your family after you’re gone, you might also want to use some of the benefit for the following:

• To cover the cost of specialist medical treatment
• To pay for accommodation close to specialist medical facilities
• To pay for the cost of transport to and from medical facilities
• To cover the cost of palliative care
• To replace the income of a family member who takes time off work to become your full-time carer
• To take a holiday with your family or tick some other items off your bucket list

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Frequently asked questions

• What is terminal illness insurance?

  Terminal illness insurance is a type of life cover that pays a lump sum if you get diagnosed with an illness which cannot be cured, such as advanced cancer. In general, you'll be eligible for terminal illness insurance unless you have a linked pre-existing condition.

• Does life insurance cover terminal illness?

  Yes. Most life insurance policies will come with terminal illness cover. This means it will pay you a lump sum before you die, if you're diagnosed with a terminal illness and have less than 24 months left to live. Terminal illness benefits can range from around $1 million to as much as $25 million in Australia.

• Can super life insurance cover terminal illness?

  Yes. If you have a terminal illness and a life expectancy of less than 12 months, you may be able to access your life insurance lump sum benefit from your superannuation fund, so long as you have a policy in place. Reach out to your super fund to find out more.

• How do I make a claim for terminal illness?

  You will need to follow a few simple steps to make a terminal illness claim under your life cover policy. After contacting your insurer, you will usually need to provide the following:

  • A completed claim form. Your insurer will send you a form to complete. Your treating doctor and specialist will also need to fill out sections of the form.
  • Proof of ID. You will need to provide a certified copy of your birth certificate, your current Australian passport or your driver's licence.
  • Policy details. Next, you will need to provide your original policy document and policy schedule.
  • Medical information. Your insurer will also need copies of any relevant medical reports, test results and investigations performed.

  Once you've submitted all the required information, your insurer has 10 days to respond.

• Can I get terminal illness insurance after I'm diagnosed?

  Typically, no. If you have already been diagnosed as terminally ill, it's very unlikely that an insurer will agree to cover you. Life insurance provides financial protection for your loved ones against the unexpected, not for when you find out you're sick

  However, you may already have life insurance in place through your super. If so, it may be able to pay out for a terminal illness.

• How is terminal illness insurance different from critical illness cover?

  Critical illness insurance, (also known as trauma insurance) can be bought as either a standalone product or as part of your life insurance policy. It pays out if you're diagnosed with any one of the critical illnesses listed in the policy document.

• Do I need to pay tax on a terminal illness payout?

  No, a terminal illness lump sum payment is tax-free, so if your benefit amount is $1 million, that's exactly how much you'll receive.

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