Contracting a
critical illness that may prevent you from working for a long period could have dire results for your family finances especially if you have a mortgage.
Critical illness cover provides guaranteed funds if you are diagnosed with a critical illness as defined in the insurance policy documentation. This extra money can be extremely useful in the event of prolonged illness.
How would you cope if you or your partner contracted a serious illness?
Critical Illness Cover can provide a lump sum to pay towards:
- your mortgage
- outstanding loans or debts
- income replacement
- lifestyle alterations or modifications to your home recuperation or medical treatment
What a
critical illness policy covers varies from different insurance companies and they can cover for a variety of serious illness. Below is a list of illness that the majority of providers will include in the policy. Although it is not exhaustive most providers will include more illnesses than these listed but it important to check the definitions carefully on what is covered. You must disclose all medical and health history. Not doing so could invalidate any future claim.
Illness typically covered by Critical Insurance Cover
- cancer
- coronary artery bypass
- heart attack
- kidney failure
- major organ transplant
- stroke
Some Interesting Critical Illness Cover Facts
- In 2006 there were over 300000 reported new cases of cancer. Source: Office of National Statistics 2008
- More than 1 in 3 people will develop some form of cancer during their lifetime
- Half of people diagnosed with cancer now survive for more than five years
- 1 in 5 men between the ages of 20 and 40 will contract a serious illness before they reach the age of 65
- Over 50 of all critical illness claims made in 2007 relate to cancer and the most common age of a claimant in 2007 was 45 and 71 of all claimants are aged 50 or under. Source: Legal & General 2007
Critical Illness Cover FAQ
What is Critical Illness Insurance?
Critical Illness Insurance covers an individual or couple named within the policy for a set period against a number of serious illnesses diseases and medical conditions that will be set out in the product conditions. It generally pays out a single tax-free lump sum on the diagnosis of one of the illnesses specified in the policy details.
Please note different providers use different definitions in relation to Critical Illness Cover and that a policy would only pay out if the customer services a predetermined time period following diagnosis unless the plan also included life cover.
Critical illness insurance normally pays a lump sum if you are diagnosed with one of a number of specified critical illnesses during the term of the policy. There may be a requirement that you survive for a period of 28 days following the date of diagnosis for the policy to pay out as the policy is intended to cover living expenses.
The list of conditions within the critical illness policy vary from provider to provider so it is important that you fully understand what you are covered for and also the exclusions attached which will not pay out on your policy.
You could use the cash payment from the policy either to pay off a debt such as a mortgage or to provide you with an income if you become too unwell to continue working or for any purpose you choose.
It is common for a critical illness policy to be combined with a life insurance policy to provide two types of cover. If you decide to purchase one of these combinations you should bear in mind that you will only be able to claim if you contract an illness as defined in the terms of the policy and you may lose the life cover element unless you have bought additional life cover.
What different types are there?
Critical Illness polices are generally the same from provider to provider in that it pays out a lump sum on diagnosis of one of the pre-determined illness within the policy. However it is the definitions of critical illness in the policy which can vary considerably from the different insurance companies. Where one company may have a definition of for example cancer another company may include a different definition so make sure you fully understand which is and what is not covered. Critical Illness policies cover numerous specified illnesses and cover varies from insurance company to company. It is important that when taking out a policy you understand which illnesses are covered by your plan.
Can I effect a policy that covers myself and my partner?
You can have a joint policy with your partner and this may prove to be cheaper than having two separate policies but bear in mind that if one partner contracts an illness on the policy list the other partners cover will cease as the policy has satisfied its intended function.
Like many types of Insurance the prospect of having more than one person covered under the same policy is an important aspect of the planning required. If you need any assistance in deciding which approach is best for you then contact us and we will arrange for an independent adviser to assess your needs.
What should I think about when choosing a policy?
Firstly you should decide the sum of money you would need if you were diagnosed with an illness which prevents you from working either long term or altogether. You might need to pay off a specific debt like a mortgage arrange for nursing care or pay for further medical assistance. Your dependents are likely to need an income which will allow them to continue to live in the same way as they had prior to you giving up work.
When you want to compare policies from different Insurance Companies it is very important to consider the illnesses that they cover before you compare the price that they charge. If you need assistance in deciding on the right policy for you simply click the contact us button and we will arrange for an independent adviser to assess your needs.