Critical Illness
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. The maximum payable varies between providers, but can range from £100,000 to £250,000.
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. This could mean changes to your home, a new car, or a permanent carer.
Critical Illness cover does not replace income, and is not intended to. If you want to protect mortgage payments or lost income, there are other more suitable products available.
What illnesses are covered?
Critical illnesses covered by each policy will differ from provider to provider. If not listed in your policy they won’t pay out. Checking the small print and terms of coverage is vital. In general, most policies will cover some forms of these illnesses:
· Blindness – permanent and irreversible;
· Cancer – excluding less advanced cases;
· Coma – resulting in permanent symptoms;
· Deafness – permanent and irreversible;
· Heart Attack – of specified severity;
· Kidney Failure – requiring dialysis;
· Stroke – resulting in permanent symptoms.
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:
· Find out if premiums are fixed or whether they’ll be increased 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. Fewer providers offer fixed premiums nowadays.
· 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.
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. Prepare for the unexpected, by making sure you truly understand exactly what is and isn’t covered. We’re here to help, so contact us for some advice.
We are licensed to provide advice on whole of market term products.