What critical illness cover does
It pays a one-off tax-free lump sum on diagnosis of a covered serious illness — cancer, heart attack and stroke are the most common claims. The money can clear a mortgage, replace income or fund treatment. The best policy isn't the cheapest — it's the one with quality definitions covering more conditions and more stages.
1. Combined with life insurance
One policy paying out on death or critical illness (whichever comes first). Best for cost-effective family protection — typically cheaper than two standalone policies. Note it pays once, then ends.
2. Standalone critical illness cover
A separate policy that pays only on critical illness diagnosis. Best when you already have life cover and want illness protection that doesn't reduce it — both can pay out.
3. Comprehensive vs basic definitions
Policies differ enormously in how many conditions they cover (from ~40 to 80+) and how they define them. A cheaper policy covering fewer conditions may not pay when you need it. Best to compare the quality and breadth of definitions, not just price.
4. Children's critical illness cover
Many policies include or let you add cover for your children at no or low extra cost, paying out if a child is diagnosed. Best for families wanting that extra reassurance.
5. Severity-based and additional payments
Better policies make partial (additional) payments for less severe conditions without reducing the main sum, and increasing payouts for more serious diagnoses. Best for fuller, more flexible protection.
How to choose a quality policy
- Compare the number and quality of conditions covered, not just price
- Decide standalone vs combined with life cover
- Check for children's cover and additional (partial) payments
- Set the sum to clear your mortgage and/or replace income
How to find the best critical illness cover
Definition quality varies hugely, so whole-of-market advice is valuable. A protection specialist compares policies properly for your needs. Find a critical illness specialist through Nesto — free, no obligation.
Frequently asked questions
What does critical illness cover pay out for?
A tax-free lump sum on diagnosis of a covered serious condition — most commonly cancer, heart attack and stroke, plus many others depending on the policy.
Should I combine it with life insurance?
Combined cover is cheaper but pays once. Standalone keeps your life cover intact so both can pay out. It depends on your budget and needs.
Is the cheapest policy the best?
No — cheaper policies often cover fewer conditions with stricter definitions. Compare quality and breadth, not just price.
Can I cover my children?
Many policies include or allow children's cover, often at little or no extra cost.
How much cover do I need?
Enough to clear your mortgage and/or replace income while you recover. A specialist will help you calculate it.