Critical illness insurance, also known as trauma insurance or trauma cover, pays you a lump sum should you suffer from a major condition or critical illness. The top three critical illnesses claimed for in Australia is cancer, heart disease and stroke.
When does a critical illness claim pay out?
A critical illness insurance claim is paid when the diagnosis of the critical illness (as defined in the policy) is confirmed. You generally need to survive for at least 14 days before a claim can be made, however this varies between insurers. This is paid as a lump sum, or as a partial payment depending on the terms of your critical illness cover and the critical illness or condition suffered.
Critical illness insurance cover is primarily designed to help cover costs associated with the medical treatments needed when suffering from trauma or a critical illness. However, there is no rule on how you should spend your critical illness payment. You may choose to use the funds to pay for living expenses, additional alternative medicine, debts, or a housekeeper. The choice is yours.
Additional extras for critical illness insurance
Some critical illness policies also include a plus or additional cover for early stage cancers. It may help to read each trauma definition for conditions you specifically seek cover for.
You might want to shop around and compare different critical illness policies to find the one best suited toward your specific needs.