Contents

• What is Critical Illness Insurance
• Features of Critical Illness Insurance
• How To Compare Critical Illness Cover
• Uses for Critical Illness Insurance

What is Critical Illness Insurance

Critical illness insurance is a form of personal insurance that is taken out to ease any financial stress that could follow if you were unfortunately stricken with a serious disease, or became totally disabled in some way, and were no longer able to pay for your own way in life. It normally delivers a benefit in the form of a lump sum payment after a prescribed period has expired which is called the ‘survival period’, this is usually about a month. On certain occasions the benefit can be paid in regular monthly payments rather than having to accept the lump sum payment.

Before becoming known as Critical Illness Insurance it was called Dread Disease Cover, since that time the list of diseases it will pay out on has grown to more than 30, although this number will differ between the various insurers. All policies, however, cover what is known as the seven core diseases, these being; cancer, stroke, multiple sclerosis, kidney failure, major organ transplant, coronary artery bypass and heart attack. All critical illness insurance policies also pay out if the insured person becomes disabled permanently as a result of an illness or injury.

Features of Critical Illness Insurance

This type of personal insurance can be taken out for a specific period or for your entire life. Many people choose to insure themselves in such a way while they are responsible for a large mortgage or while they are caring for a growing family. Others simply purchase the cover they require and keep renewing it each year. It should be remembered however that once the policy has been acquired there is usually a period of three months imposed before you can submit a claim.

Critical illness insurance should not be confused with income protection insurance, the latter is income replacement insurance in the event you should sustain a long term illness or be unable to work for an extended period of time as a result of an injury. Under these circumstances income protection insurance will only pay you a percentage of your income for a prescribed period and is not reliant on any prescribed disease or total and permanent disablement, as is critical illness insurance. For example, if you were to suffer chronic back pain you could not claim any benefit under a critical illness insurance policy but you could under an income protection policy, if it prevented you from working. On the other hand if you were to suffer a stroke you would most likely be able to make a claim under your critical illness insurance policy but not under an income protection insurance policy.

There is no restriction on how you use the proceeds of a payout from a critical illness insurance policy. You can use it to pay out your mortgage, or buy your own house so that you can live the rest of your life independently. You can use it for a long rehabilitation type holiday, clear yourself of debt, pay childcare and bring in home help; anything at all that you need financial assistance with. The benefit you will receive will allow you to appreciate your changed condition and adjust accordingly.

A major point to keep in mind is that the benefit is only payable should you survive. This is the reason a survival time is written into the insurance contract. Some insurance providers have a survival time of just 15 days while others require at least a month. To cover this anomaly you can have your life insurance and critical illness insurance combined into the one policy with some insurers.

How To Compare Critical Illness Cover

• Figure out how much critical illness cover you actually need: Consider your annual income, monthly spending, number of dependables.
• Consider the length of the cover needed: Compare both stepped and level premiums if looking for coverage for more than 15 years.
• Compare quotes from a range of insurance companies: Compare the quotes on offer from multiple providers.
• Look for any additional features
• Ensure there is adequate cover and look out for any hidden fees.
• Make sure you know exactly what is covered. Look out for medical conditions that may not be included in the policy.

Uses for Critical Illness Insurance

You will not be able to claim critical illness insurance benefits if the condition you suffer from was present from birth. Skin cancers that are not invasive are also excluded as are the more minor incidents of prostate cancer. If you have contracted a tumour that has yet to invade an organ or tissue, or a case where HIV is present you will also find it excluded. The approach to a heart attack claim has also changed in that evidence is now required of chest pain or electrocardiogram (ECG) discrepancies. Angina pain by itself is not covered.

Critical illness insurance is looked on as being of more value to single people than that of straight out life insurance as the chances of you, at some stage, being stricken down with a debilitating injury or serious disease causing total and permanent disablement, is far more likely than dying. This is particularly true in this day and age as treatments for various ailments improves and more people are being saved from death. In the past one so stricken was more likely to die.

It is equally an important cover to have for family people where such a payout would be most welcome and go a long way to alleviating much of the emotional stress involved, when the prognosis of your permanent and total disablement becomes a real factor to be dealt with.

Learn how to compare the leading life insurance policies