One of the first steps to understanding your Life Insurance Cover is knowing the difference between critical and terminal illnesses. While some of the language used by insurers can sound confusing, we thought we’d take the time to explain what each term means in relation to your policy.
Definitions of Critical and Terminal Illnesses
A critical illness refers to a potential curable injury, illness or medical condition. Some examples of a critical illness include:
- Heart attack
- Kidney failure
Whereas in life insurance terms, a terminal illness refers to a life-threatening condition that will likely be fatal within 2 years.
Some examples of illnesses that can be terminal include:
- Advanced cancer
- Motor neurone disease
- Advanced heart disease
There is no guarantee that a critical illness won’t eventually be fatal, nor is it guaranteed that a terminal illness will be fatal within 2 years. These are simply how most Life Insurances (such as Budget Direct) can delineate these types of conditions.
How does Life Insurance cover critical & terminal illnesses?
Life Insurance for Critical Illnesses (also known as Trauma Cover)
You can generally take out Trauma Cover as a standalone policy or opt to add Trauma Cover to your Life Insurance policy. This provides cover if you’re diagnosed with any of the 37 unique conditions listed in the Product Disclosure Statement (PDS).
The main trauma events that Budget Direct Trauma Insurance covers are:
- Cancer excluding specified early-stage cancers
- Coronary Artery Angioplasty – through specific procedures
- Coronary Artery By-Pass through open chest surgery
- Heart Attack with evidence of severe heart muscle damage
- Stroke in the brain resulting in specified permanent impairment
Please refer to the Product Disclosure Statement (PDS) for the full list.
If you’re diagnosed with a critical medical condition and meet the conditions of this cover, you’ll receive a lump-sum payout. With this amount, you may want to pay off debts so you can focus on your recovery; cover time off over and above your annual leave and sick leave; cover therapy or ongoing medical costs, or pay for costs that will help you adapt to a new lifestyle.
Life Insurance for Terminal Illnesses
Most Life Insurance Cover allows you to make an early claim if you’re diagnosed with a terminal illness with less than 24 months to live, instead of the beneficiaries receiving it as a Death Benefit. This is known as a Terminal Illness Benefit.
Budget Direct’s Life Insurance can advance the terminal illness benefit amount once a diagnosis is received by two Medical Practitioners that the illness or injury is likely to result in death within 24 months. The Terminal Illness Benefit can help you clear debts (like your mortgage or education) or fund any adventures you may wish to experience and share with your loved ones.
Find the Right Life Cover
Both types of covers are valuable and can help you look after those you love if something untoward should happen. And choosing the right cover will help you gain additional peace of mind and support your family, even when you may not be around. Always read the Product Disclosure Statement to understand any terms and conditions of these benefits.
Budget Direct’s Life Insurance currently offers 1 month’s cover for free. Once you apply and are issued cover, you’ll not start paying premiums until one month after the commencement date of the cover.