What Is Critical Illness Cover?
Critical illness cover is a type of insurance that pays out a lump sum if you’re diagnosed with one of the serious medical conditions named in your policy—such as cancer, heart attack, or stroke. Unlike standard life insurance (which only pays on death), critical illness cover gives you money while you’re still alive, to help with medical bills, everyday expenses, or to give you time off work for treatment and recovery.
For many of us, a serious health event brings extra costs—specialist fees, home care, travel for treatment, or just keeping up with bills when you can’t work. Critical illness cover steps in and gives you a payout at the moment you need it most, helping you and your whānau stay financially secure while you focus on getting better.
The Benefits of Critical Illness Cover
One of the biggest advantages of critical illness cover is the flexibility it offers. When the lump sum pays out, you decide how to use it. You might choose to cover hospital and treatment costs not met by ACC or your private health insurance. Perhaps you’ll use it to keep up mortgage or rent payments, so you don’t fall behind while you’re off work.
Because the payment is tax-free, every dollar goes towards what matters most—whether that’s medical bills, childcare, or everyday living expenses. For union members who may already have ACC support, critical illness cover can top up those benefits and help avoid dipping into savings or high-interest debt.
Another benefit is peace of mind. Knowing you have cover in place means you can focus on recovery rather than worrying about money. This emotional relief can be just as valuable as the financial support, helping you and your family plan calmly for the months ahead.
Common Exclusions and Waiting Periods
No policy covers every possible condition, so it’s essential to read the fine print. Typical exclusions in critical illness cover include less severe forms of injury or illness (for example, some early-stage cancers), certain congenital conditions, and pre-existing health issues you’ve declared when taking out the policy.
Most insurers also apply a waiting period on some of the conditions to avoid fraudulent claims. This is often 90 days from the policy start date before you can claim. That means if you’re diagnosed in those early months for those specific conditions, you won’t be eligible to claim. Then, I would remove this part as it’s confusing: Similarly, there may be a benefit period: after you’ve claimed, your cover could end or be reduced for future claims.
Your policy might also exclude conditions arising from self-inflicted injury or illegal activities. Always check the definitions section so you understand exactly which illnesses are covered and which are not. If you have any doubts, ask your adviser to walk you through the list of covered conditions and exclusions line by line.
Fitting Critical Illness Cover into Your Overall Plan
Critical illness cover is best viewed as one piece in a wider insurance puzzle. You may already have life cover, income protection, or health insurance through your employer or union benefits. Critical illness cover fills a gap by paying out on serious diagnoses, not just death or loss of income.
Start by reviewing what you already have. If you have life insurance through a superannuation scheme or a union-negotiated group policy, find out whether it includes critical illness cover—some do, but often at lower benefit levels. Compare the sum assured, exclusions, and premium rates against standalone policies to see if you need extra cover.
Income protection pays a percentage of your salary if you can’t work, but it might not cover every expense. A critical illness lump sum can be used immediately, giving you freedom to choose the best treatment options, invest in rehabilitation, or make home modifications if needed.
By layering these products—life cover, income protection, and critical illness cover—you build a resilient plan that protects you in different scenarios. Your adviser can help you balance premiums and benefits so your total insurance cost fits within your budget.
Taking the Next Steps
Getting started is straightforward. Arrange a chat with a Union Plus–endorsed adviser to discuss your current cover and future needs. They’ll assess your health history, financial commitments, and family situation to recommend the right level of critical illness cover.
Be ready to share details of any existing policies, along with information about your household expenses and outstanding debts. The more your adviser knows, the better they can tailor a plan that keeps you on track—even when life throws a curveball.
Ultimately, critical illness cover is about protecting your whānau from financial stress at a time when you need support the most. By understanding its benefits, knowing the exclusions, and fitting it into your broader plan, you’ll gain confidence that you have a safety net in place—so you can get the care you need without worrying about how to pay for it.