Critical Illness
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What is it?
Critical Illness cover is designed to help you cope with the kind of illnesses that can change the way you live the rest of your life. Typically, it pays out a lump sum if you are diagnosed with a specified illness within the term of the policy. In addition, claims will be paid in the event of total and permanent disability if this optional benefit is included. The maximum payable varies between providers, but typically cover can be taken up to £500,000 and considerably more if required with some companies. Cover can be arranged on a term basis or whole of life. It's worth knowing that some whole of life policies include the same amount of life cover free of charge. Plans can be arranged on a single or joint life basis for individuals or cover for company directors, key personnel. Minimum ages at entry vary between companies from as young as16 to a potential maximum age of 74.
Unlike other insurance that is linked to your ability to work, and acts as a replacement if you are unable to earn an income, critical illness cover is designed to help you pay for the things you need after diagnosis, perhaps pay off debts or just allow you some financial breathing space to recuperate. This could mean changes to your home, a new car, or a permanent carer or simply paying off your mortgage. You decide as appropriate. The sum assured is paid directly to you as a tax-free lump sum although an alternative to a lump sum is available if selected at outset.
Critical Illness cover is sometimes confused with Income Protection but they are different and principally critical illness policies pay out on diagnosis of a valid condition and whether you can continue to work or not is irrelevant. If you simply want to protect mortgage payments or lost income in the event of being unable to work due to an accident or sickness see income protection or accident, sickness & unemployment.
What illnesses are covered? This varies somewhat from one company to the next however, in general they tend to cover what they call "core illnesses" and then a further, longer list of additional conditions.
The major or core illnesses include:
Cancer
Coronary Artery Bypass Surgery
Heart Attack
Kidney Failure
Major Organ Transplant
Multiple Sclerosis
Stroke
Critical illnesses covered by each policy vary from provider to provider. If not listed in your policy they won’t pay out and for example, only some forms of cancer, heart attack or stroke are covered. Checking the small print and terms of coverage is vital and frankly the importance of advice is crucial because generally people need the best definitions that make it easyest to claim from the insurance company.
To see a list of the additional conditions that are covered by one of the most comprehensive policies please click here.
We can email personalised illustrations and product literature to provide further information in PDF format if required.
Some insurers will also automatically exclude any condition you already have, or are likely to get because of your lifestyle and state of health. If they regard you as a higher risk, premiums may be more.
Things to watch for:
There is a lot more to critical illness cover than meets the eye, particularly when you compare the actual conditions covered between the providers which is why we need such an extensive research department to highlight the strengths and weaknesses of each provider's product.
Decide whether you want a fixed premium which will never increase or one that appears less now but will increase during the term at regular intervals, following a review by the insurer. Fixed premiums may appear more expensive, but could prove cheaper over the duration of coverage.
How long you must survive after diagnosis in order for the policy to pay out. Critical Illness is not life insurance, and will not pay out when you die, even if you die of a specified illness. You must survive for a set time, and this duration will differ between insurers.
· A growing number of critical illness policies also cover children, so if you’ve a family it’s worth wrapping up your protection into one.
Your duty of full disclosure
When applying for a policy (particularly critical illness cover) it is essential that you answer the questions as accurately as possible and above all, honestly. Please be aware that the insurance company is assessing the risk in good faith, based on the information that you give them, which, if this turns out to be false, could invalidate your policy. It is common prior to an underwriting decision, for the insurance company to contact your doctor for specific information that might relate to a condition that you have disclosed, but you cannot rely on them to do this as a matter of course. To see useful advice given by one of the insurance companies on this subject please click on the following document. Insurance company advice
Need more help?
Most people think that these illnesses will not happen to them. Hopefully they won’t. However, critical conditions are not as rare as you might think as evidenced by the insurance company annual claims figures. Prepare for the unexpected, by making sure you truly understand exactly what is and isn’t covered. We’re here to help, so please ask for further information or advice.