Critical Illness Insurance
We all know someone who has suffered the effects of cancer, heart
disease or stroke.
One in four women and one in three men are likely
to suffer some form of cancer before turning 75^, while there's a 50%
chance of a 40-year-old man, and a 33% chance of a 40-year-old woman,
developing coronary heart disease.*
The chance that major illness may
strike you is very real. Don't let it be financially critical. Critical
Illness Insurance can provide a lump sum payment if you suffer a
critical illness such as a heart attack, stroke or malignant cancer.
Definition
Pays a lump sum in the event of a diagnosis insurable
condition, e.g. cancer, stroke, heart attack, major head injuries.
Purpose
If a person suffers a medical illness, term life insurance
won’t help as the person is still alive. Suppose a person has a mild
heart attack and is seriously ill but is able to return to work after
two months. Will he or she be as productive as before or stand the
stress associated with working as hard? Policies like income protection
and TPD may not be suitable since pay-out depend on the effect of the
event after its occurrence. What is needed is a cover like critical
illness
insurance which pays out on the actual occurrence of the incident.
Critical illness insurance (also known as trauma insurance) provides a
cash lump sum in the event of contracting a specified disease or illness.
The number of conditions covered (benefits) varies widely, cheaper
policies often offering less benefits.
In most cases "accidental"
types of illnesses are covered immediately, although many insurers impose
a waiting period (commonly 90 days after the policy is accepted) for
certain illnesses. Typically critical illness policies will pay benefits in the
case of some or all of the following critical illnesses:
- Alzheimer's Disease
- Aplastic anaemia
- Blindness
- Burns - severe/major
- Cancer
- Cardiomyopathy
- Coma
- Coronary artery angio
- Coronary bypass surgery
- Deafness
- Dementia
- Diplegia
- Encephalitis
- Heart attack
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- Heart valve surgery
- Hemiplegia
- HIV -occupational acquired
- Kidney failure - chronic
- Liver disease - chronic
- Loss of independent existence
- Loss of limbs and/or eye
- Loss of speech
- Lung disease - chronic
- Major head trauma
- Major organ transplant
- Motor neurone disease
- Multiple Sclerosis
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- Paraplegia
- Parkinson's Disease
- Pulmonary hypertension
- Quadriplegia
- Stroke
- Terminal illness
- Life Cover - death benefit
- Total & Permanent Disability
- Aortic surgery
- Out of hospital cardiac arrest
- Benign brain tumour
- HIV - accidental infection
- Peripheral neuropathy
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The function of critical illness insurance is to:
- Pay for specialist or international medical attention
- Cover the cost of modifications to the home
- Avoid financial stress in recuperation (debts, etc)
Target Market
- To repay debt
- Single people wishing to maintain financial independence.
- A homemaker who would usually perform the duties of a housekeeper or
nanny.
- Those who may require cash support for their business while they take on
the role of carer.
- Those who would like to be able to choose private medical care rather
than remain on a waiting list.
How much cover should you have?
You can tailor the amount of Critical Illness Cover to suit your individual
circumstances. In deciding how much cover you need, you should consider
the costs of your living expenses, the medical costs associated with a
serious illness, as well as rehabilitation costs. Ideally, your
insurance cover should be enough to pay off your debts so you can
concentrate on getting better, without worrying about your finances.
Taxation
Premiums are not tax deductible however benefits are paid tax-free. An
exception occurs where the critical illness insurance is part of key person
insurance. In August 1995, the Australian Taxation Office (ATO) issued
several Tax Determinations in respect of the taxation implications of
critical illness insurance to the policy owners. These determinations have
confirmed that for individuals (i.e. employees and self-employed
persons) the premiums paid for critical illness insurance cannot be claimed as a
deduction from assessable income, and any proceeds received are not
treated as income.
The reason behind this ruling is that the policy does not replace
earnings lost by the policy owner, but rather provides a capital amount
if the insured suffers a specified illness (TD 95/41).
How to apply
To apply for Critical Illness Insurance, contact
Austbrokers Countrywide for an application form.
Complete the Sum Insured Checklist.
Transfer your existing policy to Austbrokers Countrywide
If you are not getting the type of service you expect maybe you should
consider a change and utilise the services of our experienced and
professional advisory team.
By transferring your existing policies under our management you are
entitled to the following services.
- Initial Full Insurance Review
- Annual Individual Insurance Comparison Report
- Advisory Hotline for all Personal Insurance enquiries
- Claims Assistance
- Insurance Advice for Family & Friends
Remember this is a free service if you transfer your policy to us.
Simply call Austbrokers Countrywide on 1800 245 123
or email us at
riskmanagement@abcountrywide.com.au.
^ Australian Institute of Health and Welfare, Australia's Health 2002
* National Heart Foundation Statistics, Australian Facts 2001 Highlights
Page updated: 13/10/08 |
