If you have a family to support, you might be considering taking out a health insurance policy to offer you some protection in the event that you become unable to work through illness.  Before you make a decision, have a chat with a good insurance broker in your area.  In the meantime, here's a beginner's guide to the different types of health insurance that are available.

Accident and sickness insurance

Accident and sickness policies are offered by insurers on an annual basis.  When your policy renewal date comes around, your insurer may increase your premiums or decline your renewal altogether if you have made a claim during the preceding year.

This type of policy provides you with a lump sum pay-out under the following circumstances following an accident or illness:

  • death of the life assured
  • loss of a limb or limbs
  • irreversible loss of sight in one or both eyes
  • permanent and total disability

You will also receive weekly payments if you become temporarily disabled because of an accident or illness.  These benefits are usually paid out for a maximum of one year following your incapacity and are not taxable.  Any lump sum payment you receive will also be tax-free.

Critical illness insurance

Critical illness insurance pays out a non-taxable lump sum if you are diagnosed with an illness or disease during the life of the policy.  Policy terms and conditions do vary considerably, so it's crucial that you understand exactly what you are covered for when you take out the policy. 

Most critical illness policies will pay out a lump sum upon definitive diagnosis by a specialist of a particular specified medical condition, including:

  • heart attack
  • multiple sclerosis
  • cancer
  • kidney failure
  • stroke

There are different types of critical illness policy available, including stand-alone policies, or add-ons to existing life insurance plans.  If you think that a critical illness policy is what you're looking for, discuss the options fully with an insurance broker before signing-up.

Private medical insurance plans (PMI)

PMI policies are designed to cover the cost of private in-patient and out-patient medical treatment.  The cover provided by such policies includes the following:

  • consultant fees
  • surgeons' fees
  • anaesthetists' fees
  • private ambulance charges
  • hospital room charges

The cost of these policies is based upon the age of the proposer, the type of hospital band required, and the number of family members that you want to include under the policy.  Hospital bands are worked out depending upon the area you live in and what facilities your chosen hospital offers.  You can also reduce the cost of your policy by electing to pay an excess on the policy.

PMI premiums are reviewed annually.  What you will pay increases as you age or if you have to make any claims on the policy.  Many PMI providers do not require medical evidence from new applicants, but they will not pay-out if you do not declare an existing medical condition and subsequently try to claim for it.

Benefits from private medical insurance policies are not generally taxable.

In conclusion

As you can see, there many different options available when you're looking for medical insurance cover.  Have a chat with a reputable insurance broker in your area, such as those at National Corporate Broking Pty Ltd, for guidance on what type of policy would best suit your circumstances.