Life Insurance Terminal Illness

Find out more about life insurance coverage for terminal illnesses and compare policies through Savvy.

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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.

Life insurance can provide financial security to you and your loved ones in the event of an unexpected illness or death. For those with a terminal illness, such as cancer or degenerative diseases such as Alzheimer’s, it can be especially crucial to have a plan in place to ease the financial burden on your family during a difficult time and after you pass away.

If you're considering buying life insurance in the event you’re diagnosed with a terminal illness, it's important to compare policies from multiple insurers to help you find the best coverage for your needs. With Savvy, you can easily compare terminal illness cover options from a range of trusted insurers in one place. Get started today with a free, no-obligation quote through us.

What is a terminal illness in life insurance?

A terminal illness as defined by a life insurance policy is one where the policyholder is diagnosed with an incurable condition which is expected to result in their death within 12 to 24 months of the diagnosis (depending on your insurer’s terms and conditions). This will generally require certification from at least one to two specialists and will be subject to your insurer’s other qualification criteria.

However, it’s important to note that this definition may vary between insurers, so you should always check with yours before you purchase your policy.

Can I receive a life insurance payout if I’m diagnosed with a terminal illness?

You can receive a life insurance payout if you’re diagnosed with a terminal illness, provided you satisfy your insurer’s criteria related to your illness. This is known as a terminal illness benefit and is often included as a standard feature in life insurance policies.

The purpose of the terminal illness benefit is to provide financial support to the policyholder during a difficult time, as well as provide funds to their family to prepare for costs related to the end of their life.

The payout can be used to cover medical expenses, home care and other costs associated with the illness. It can also provide peace of mind and financial security for the policyholder's loved ones and be used for any other household expenses, such as mortgage repayments or other ongoing bills.

It’s important to note that although life insurance policies do include a terminal illness benefit, it’s still essential to review the terms and conditions before purchasing your policy so you can be sure of what is and isn’t covered.

Additionally, some policies may have specific exclusions or waiting periods before the benefit is payable. You can compare a range of offers through Savvy, which you can start today.

Will I be able to buy life insurance if I have a terminal illness?

If you’ve already been diagnosed with a terminal illness before purchasing your life insurance policy, it’s unlikely that you’ll be able to buy one. This is because insurers assess applications based on the risk posed by the policyholder of making a claim. If you’re suffering from a terminal illness, you’re likely to be deemed too great a risk to insure.

As such, if you’re looking to lock in life insurance coverage, it’s important to do so while you’re still fit and healthy, as this will maximise your chances of being covered if you fall ill down the track.

Types of life insurance

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Common questions about life insurance and terminal illness

What’s the difference between critical and terminal illness in life insurance?

The key difference between terminal and critical illness is that while terminal illness cover only pays out if you’ve been given 12 to 24 months to live, critical illness in life insurance refers to a serious medical condition or illness which is listed in the policy as a condition that would trigger a lump sum payment from the insurer. This is the case regardless of whether the critical illness is considered terminal, such as non-terminal cancer. Such conditions are covered under a different type of insurance known as trauma cover, or critical illness cover.

How do I make a terminal illness claim with my life insurer?

To make a terminal illness claim, you’ll need to contact your life insurer and provide them with evidence of your diagnosis, such as a medical certificate or report from a qualified medical practitioner (or practitioner). Your insurer will then assess your claim and may request additional information or evidence, after which you can receive an outcome on your claim.

How much can I receive as a life insurance payout if I’m diagnosed with a terminal illness?

Life cover in Australia comes without a maximum amount, meaning you can select how much to insure yourself for in the event of your death or terminal illness diagnosis. The more you’re insured for, the more your policy will cost, so consider the amount you or your family may need in the late stages of your life or after you pass away.

What happens if I survive longer than 12 to 24 months after receiving my terminal illness benefit?

In most cases, you won’t be required to repay your life insurance benefit if you outlive your life expectancy as indicated by your specialists. However, once you receive your payout, your coverage will cease and you’ll no longer be able to receive any benefits or coverage from that policy.

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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.