Critical illness cover provides a lump sum if you are diagnosed with a specified medical condition like cancer, heart attack or stroke. A lump sum is paid regardless of whether you are able to continue to work or not.
It's sobering to learn that before the age of 70#, 68% of men and 47% of women will either suffer a critical illness, be diagnosed with cancer, have a heart attack or stroke, undergo bypass surgery or die from something other than a critical illness*. In addition, 60% of Australian families with dependants will run out of money within 12 months if the main income earner dies^.
# This is general population data based on being aged 30 now.
* Source: General Reinsurance Life Australia Limited 2005/2006.
^ TNS Research: Investigating the issue of underinsurance in Australia August 2005