Critical Illness Life Insurance

Compare a variety of critical illness life insurance policies through Savvy today.

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, updated on July 19th, 2023       

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Life Insurance

We’ve partnered with Compare Club to bring you a range of life insurance policies to help you compare them side by side.

Taking out critical illness coverage with your life insurance policy can help relieve some of the stress and financial burden of being diagnosed with a severe disease or major injury which is covered by your policy. However, it’s crucial to compare your options before you buy your policy, which you can do right here through Savvy.

By comparing through us, you can consider offers to help you see which deal best suits you and your family's needs from a panel of leading insurers. You’ll be able to consider benefit limits, premiums and more, so get the ball rolling by getting a quote through Savvy today.

What is critical illness life insurance and how does it work?

Critical illness cover is a type of life insurance which can offer a lump sum payment (up to $2 million with some insurers, depending on whether you satisfy their terms and conditions) if you suffer from a covered severe medical condition or serious injury. This is also known as trauma insurance. If you receive a payout through your policy, you and your family will hopefully be able to focus on healing and recovery instead of trying to find money in an emergency to make ends meet.

Critical illness life insurance payouts can be used for whatever you choose. However, most elect to cover some of the following costs when they receive their payment:

  • Urgent medical expenses
  • Any required alterations to your house
  • Day-to-day living costs such as petrol and groceries
  • Special transport or nursing costs
  • Paying back your debt or making mortgage repayments

When considering taking out critical illness life insurance, it's a good idea to weigh up how much you and your family would need if you could no longer work due to an illness or injury. Also, remember that your private health fund may help you pay some of your urgent medical expenses, so it's important to check how much you may be covered for under your current policy.

You’ll be able to compare a range of quotes for critical illness cover through Savvy. Simply answer a few questions about yourself and your life and health situation to access offers from some of Australia’s leading insurers and lock in your cover before you know it.

What does critical illness insurance cover?

Critical illness life insurance can come with a raft of benefits which can help you and your family focus on your recovery rather than worry about money. Some of the critical diagnoses which can be covered under your life insurance policy (subject to your insurer's terms and conditions) include:

  • Alzheimer’s disease
  • Blindness
  • Burns
  • Cancer (most types)
  • Deafness
  • Head trauma
  • Heart attacks
  • Loss of speech
  • Loss or paralysis of a limb
  • Lung disease
  • Major organ transplants
  • Severe anxiety or depression
  • Severe diabetes
  • Stroke

However, there may be variations in what's covered and what isn't. Make sure you read your policy's Product Disclosure Statement (PDS) to find out what's included in your critical illness insurance.

This benefit is typically paid out only in the event of a serious illness from which recovery is anticipated. Because of this, many people opt to bundle their life and critical illness insurance into a single policy.

What factors can influence the cost of critical illness life insurance?

Several factors can impact the cost of your critical illness life insurance policy, such as:

  • Your age: due to the higher likelihood of developing serious illnesses and medical problems as we age, a person's premiums reflect this increased risk. People under the age of 40 typically pay lower insurance premiums than those over the age of 50 or 60.
  • Sex: women often pay less for life insurance than men due in part to their greater life expectancy, though this only one of many factors.
  • Overall health: you can expect to pay higher insurance premiums if you smoke cigarettes or are overweight. An individual's BMI, along with other risk factors like blood pressure and cholesterol, can be used to establish their insurance premium.
  • Occupation: if you're working in a job with exposure to hazardous substances, heavy machinery or infectious disease, you can expect to pay more for coverage (if you're eligible to receive cover).
  • Family medical history: you may have to pay a higher premium on your life insurance policy if you have a history of certain types of cancer or heart conditions in your family.

The premium structure you select will also have an impact on the total cost to you. There are two options:

  • Stepped premiums: these are premiums which rise each year as you get older. These may be less expensive initially, but they're likely to cost more when you're older.
  • Level premiums: these are set in stone at the time you buy the policy and only rise in line with inflation, rather than your increasing risk. These may cost more to begin with, but are generally cheaper each year when you're older.

Types of life insurance

Why compare life insurance through Savvy?

How do I apply for critical illness cover through Savvy?

Frequently asked critical illness life insurance questions

How does critical illness cover differ from TPD insurance?

There are many differences between these two policies. However, the main one is that critical illness life insurance can pay out in the event of a covered injury or illness, while a TPD policy can only offer you a payout if you’re permanently disabled and unable to return to work, either in your current job or in any position relevant to your education, training and experience. Critical illness insurance is also not available through your superannuation fund, unlike TPD insurance. Maximum payouts also differ, with critical illness potentially covering you for up to $2 million, while TPD insurance may be able to offer up to $3 million to $5 million worth of cover (all covered amounts and payouts are subject to your insurer's terms and conditions).

What are some of the exclusions on critical illness life insurance?

Some of the general exclusions on critical illness life insurance policies include making claims for events inside the waiting period (such as the first 90 days of coverage), self-inflicted injuries or suicide and undisclosed pre-existing medical conditions.

Are my critical illness life insurance premiums tax-deductible?

Insurance premiums aren’t tax-deductible, but benefits from a claim also typically aren’t subject to income tax either. This means that you likely won't be required to pay any tax on your critical illness payout, regardless of how much you receive.

What’s the age limit on critical illness life insurance?

The maximum entry age to purchase a trauma insurance policy is 65, while the age at which your policy expires is usually no more than 75. However, both of these are subject to your insurer's terms and conditions, so you may not be eligible to take out a policy in some cases even if you fit within the age limit in some cases.

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Savvy is partnered with Compare Club Australia Pty Ltd (AFS representative number 001279036) of Alternative Media Pty Ltd (AFS License number 486326) to provide readers with a variety of life insurance policies to compare. Savvy earns a commission from Compare Club each time a customer buys a life insurance policy via our website. We don’t arrange for products to be purchased from these brands directly, as all purchases are conducted via Compare Club.

Savvy does not compare all life insurance policies or providers currently operating in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy.

For any further information on the variety of insurers compared by Compare Club or how their business works, you can read their Financial Services Guide.