Business And Finance

A Closer Look At Critical Illness Insurance In Australia: Is It Right For You?


Critical illness insurance is a specific policy designed to offer holders peace of mind and financial fluidity if the worst happens and they become critically ill or injured. In this article, we will take a look at some of the finer points of critical illness insurance and how it benefits Australian families everywhere from Perth to Townsville.

Some features and benefits of critical illness insurance

  • Excellent financial support – Amounts vary depending on the exact terms of your policy but critical illness insurance payouts are typically significant.
  • Cover for children – Youngsters are not excluded and can be provided with coverage if aged 2-19, albeit with a much-reduced payout.
  • Advancement – Some premium policies offer advanced payout of a portion of the full amount in the event of certain injuries and illnesses.
  • Paralysis support – A built-in feature that doubles your payout if you are unfortunate enough to face a permanent paralysing disability.
  • Inflation protection – any critical illness insurance policy increases annually to keep pace with inflation.

What are the differences between critical illness insurance and income protection insurance?

There are certainly some significant similarities between critical illness insurance and income protection in Australia. Most importantly, they both provide you with financial support if you are incapacitated and unable to generate income. There will assuredly be differences in the terms and conditions of individual policies but the major difference between them is as follows:

  • Critical illness insurance policies provide a single lump sum payment.
  • Income protection insurance policies pay up to 70% of your lost income on an ongoing, monthly basis.

Clearly, this makes a huge difference in any decision-making process and is also reflected in the insurance premiums you can expect to be offered.

Are there any critical illness insurance options to be aware of in Australia?

It may affect your policy research and any final decisions to learn that critical illness insurance can not only be purchased as a standalone policy. Subject to terms and conditions and following a discussion with your insurer, it is a proviso you may be able to add to a life insurance policy. Typically, life insurance policies only pay a lump sum when the policyholder is deceased or diagnosed with a terminal illness. However, there are cases when you may be able to attach a level of critical illness insurance to that policy rather than having to create a separate one.

  • It is important to do your homework carefully and ask as many questions as necessary before agreeing to any conglomeration of this kind. If the payout amounts involved are reduced, it may not be worth combining policies in this manner.
  • If in doubt, seek advice from an independent financial advisor.

How much coverage will be enough?

This is a question only you can answer by looking in detail at everything from your lifestyle and family status to your age and existing financial security. Honestly assess your circumstances and calculate how much it would take to maintain your standard of living if you suddenly became critically ill.


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