Terminal Illness vs Critical Illness Cover: What Is the Difference?
Terminal Illness vs Critical Illness Cover
Terminal illness cover and critical illness cover are both valuable protection benefits, but they work in different ways and cover different circumstances.
How Terminal Illness Cover Works
Terminal illness cover comes as a bolt on to most life insurance policies, usually at no extra cost. If you're diagnosed with a terminal illness and given 12 months or less to live, it pays out your life insurance early, while you're still alive, rather than your family having to wait for a death claim. This means you can use the money to spend time with loved ones, cover medical costs, or simply put your affairs in order.
How Critical Illness Cover Works
Critical illness cover pays a tax-free lump sum if you're diagnosed with one of a list of specified serious illnesses, such as cancer, heart attack or stroke. Unlike terminal illness cover, it doesn't require a terminal diagnosis. It's designed to support you financially if you become seriously ill but are expected to recover, helping with treatment costs, mortgage payments or living expenses while you're unable to work.
Key Differences
| Feature | Terminal Illness Cover | Critical Illness Cover |
|---|---|---|
| Pays out on | Diagnosis of a terminal illness with a life expectancy of 12 months or less. | Diagnosis of a specified critical illness covered by the policy, such as cancer, heart attack or stroke. |
| How it's provided | Usually included with life insurance at no additional cost (subject to insurer and policy terms). | Available as a standalone policy or added to life insurance for an additional premium. |
| Purpose | Provides early access to your life insurance benefit if you're diagnosed with a terminal illness. | Provides a lump sum if you're diagnosed with a covered critical illness and survive any applicable survival period. |
Pays out on
Terminal Illness Cover
Diagnosis of a terminal illness with a life expectancy of 12 months or less.
Critical Illness Cover
Diagnosis of a specified critical illness covered by the policy, such as cancer, heart attack or stroke.
How it's provided
Terminal Illness Cover
Usually included with life insurance at no additional cost (subject to insurer and policy terms).
Critical Illness Cover
Available as a standalone policy or added to life insurance for an additional premium.
Purpose
Terminal Illness Cover
Provides early access to your life insurance benefit if you're diagnosed with a terminal illness.
Critical Illness Cover
Provides a lump sum if you're diagnosed with a covered critical illness and survive any applicable survival period.
Do You Need Both?
Terminal illness cover is included with most life insurance policies as standard, so if you have life insurance, you likely already have it. Critical illness cover is a separate decision, and many people choose to add it alongside their life insurance for broader protection if they're diagnosed with a serious illness but not a terminal one.
The conditions covered and the definitions used vary between providers, so getting advice is important to ensure you have the right cover.
Next Steps
Visit our personal protection page or book a consultation to review your cover.
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