What is Critical Illness Cover?
Critical Illness Cover allows you the opportunity to protect yourself against conditions such as heart attacks, strokes and advanced cancers. Known as 'Critical Illnesses', these conditions can have a dramatic effect on your life which may mean you are unable to work and therefore unable to continue to make mortgage or liability payments. It may also mean that you need specialist medical care, for which you could be waiting a long time on an NHS waiting list.
The cover itself will pay a lump sum when you are diagnosed with one of the specified critical illnesses on the insurance companies list of illnesses covered.
It comes with a variety of options which are designed to suit your circumstances and fit to your needs.
Why would I need Critical illness insurance?
Critical Illness Insurance is something which should be considered by everyone but in particular if you have a mortgage or a family it is something that you should definately consider.
According to statistics released by BUPA, 1 in 4 people will suffer from some form of Critical Illness between their 30th and 60th birthdays (Source: BUPA 2006). For many people suffering from a critical illness could cause more than physical damage to themselves. The effects can spread into all areas of their lives and not least into their financial situation. Most people will require at least some time off work to recover from the illness and in some cases they may not be able to return to work at all.
Ask yourself this question: For how long could you keep paying your mortgage repayments if you couldn't work?
According to a recent survey, only half of the UK's 29 million workers could survive the recommended 4 month financial safety net if they were unable to work (Source: FT.com January 2009). Even for those with the financial safety net, once it runs out times become hard.
So how does Critical Illness Insurance help with this problem? Your Critical Illness Cover will pay out a lump sum when you are diagnosed with one of the specified conditions allowing you to pay off your mortgage or giving you a pot to continue making repayments whilst you are ill. At the same time that pot could also be used for specialist private medical treatment to help you back to full health as fast as possible.
What conditions are covered in my policy?
The conditions covered within your Critical illness policy vary depending on the insurance company. Every insurance company is obliged to cover certain conditions known as the ABI (Association of British Insurers) conditions however most companies choose to cover additional illnesses. Full details of the conditions covered by each company can be found in the policies Key Features Document but a general list is shown below:
ABI Conditions (Covered by all companies)
- Aorta Graft Surgery
- Benign Brain Tumour
- Advanced Cancers
- Coronary Artery Bypass Grafts
- Heart Attack
- Heart Valve Replacement
- Kidney Failure
- Loss of Hands or Feet
- Loss of Speech
- Major Organ Transplant
- Motor Neurone Disease
- Multiple Sclerosis
- Paralysis of Limbs
- Terminal Illness
- Third Degree Burns
- Traumatic Head Injury
Do all the insurance companies cover the same illnesses?
No, not all insurance companies cover the same illnesses as part of their Critical Illness Cover. They all have to cover the Association of British Insurance guidelines but above and beyond those many companies choose to cover additional illnesses.
Ask your advisor or check your Key Features Document for full details of the conditions included in your cover.
What are the various options for my Critical Illness Cover?
Like Life Insurance, your Critical Illness Insurance is designed to be flexible enough to suit your circumstances and needs. With this in mind there are a variety of options when you take your cover:
- Critical Illness Cover / Critical Illness Insurance
General terms used to describe the insurance policy as a product.
- Decreasing Critical Illness Cover
Critical Illness Insurance designed to decrease inline with your mortgage as the years go by. This type of cover is only suitable for Capital and Repayment Mortgages and should never be taken with Interest Only or Part Interest/Part Repayment mortgages.
- Level Critical Illness Cover
The opposite of Decreasing cover, this Level cover means that the amount of cover you select at the beginning of the term will be exactly what is paid out to you, if you need to make a claim. This is suitable for people with Interest Only (or part and part) mortgages or those simply wishing to receive a fixed amount if the worst happens.
- Increasing Critical Illness Cover
Increasing Critical Illness Insurance allows you to protect your policy against the effects of inflation. Each year the insurance company will offer to increase your cover, without any new medical information, to offset the effects of inflation over the previous year. Using this method you can be sure that your policy will retain its real value.
- Index Linked Critical Illness Cover
Another name for Increasing Critical Illness Cover.
Can my children be covered on my policy?
With some insurance providers you are now automatically covered if your children were to develop one of the critical illnesses. The exact terms vary from company to company with some offering lower payouts and only on certain conditions but the children's cover (where available) is offered free of charge. Full details can be sought from your advisor or from the insurance companies Key Features Document.
Can I combine my Critical illness with Life insurance?
A great way to keep your protection premiums down is by combining your Critical Illness with Life Insurance. Because of the competitive nature of the Critical Illness market, by taking your Critical Illness with Life Insurance as part of a package, the premiums can be considerably lower compared to taking the two protections seperately.
Most insurance companies will allow you to combine the policies which along with the premium savings also makes it much easier for you to administor your policies with a single set of policy documents and single bank details.
Whats the difference between Terminal Illness Cover and Critical Illness Cover?
Terminal Illness Cover and Critical Illness Cover are NOT the same thing!
Terminal Illness Cover is something included with Life Insurance policies which will pay out if you are told by a doctor that you have a condition that will kill you within the next 12 months. This is the only time it will payout and will not pay if you suffer from an illness which is not terminal.
Critical Illness Cover on the other hand will payout for any of the specified condition whether they are terminal or not.
How can I get Critical Illness Insurance?
Getting Critical Illness Insurance is a fairly straightforward process. Start by getting your free, no obligation quotations and then choose to either apply direct online or have one of our qualified advisors call you and talk you through the steps needed.
In brief the process requires you to answer a series of occupation, medical and lifestyle questions for the insurance company to fully underwrite and consider your application. The insurance company may request some additional medical information from your GP if it is required but they will cover all expenses and there is nothing for you to pay apart from your insurance premiums once a suitable cover is found.
Insurance Jargon Buster - A Plain English Guide
Like with most subjects, insurance comes with its own language which can include its own confusing terminology. Our Jargon buster aims to help you clarify what some of the terminology you might find on our website means so that you can fully understand the policies and covers you are considering.
Critical Illness Cover - A Quick and Easy Introduction
Critical Illness Cover (or Critical Illness Insurance as it is also known) is an insurance cover designed to pay you a cash lump sum if you are diagnosed with one of a number of designated illnesses. Generally speaking this type of insurance covers you for illnesses such as heart attacks, strokes and advanced cancers, amongst others, and will pay out a lump sum which is normally aimed at covering your medical costs or paying off liabilities such as mortgages and loans.