Critical Illness Cover

Critical Illness insurance is a long-term insurance policy designed to pay a lump sum or income on the diagnosis of certain life-threatening or debilitating (but not fatal) conditions such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs.

The illnesses covered will be specified in the policy along with any exclusions and limitations – these differ between insurers. Critical illness policies usually only pay out once, so are not a replacement for income. You can use the payout to pay for medical treatment, pay off your mortgage or anything else.

Many people buy critical illness insurance when they take on a major commitment such as a mortgage.

Cost

    • The premiums are typically cheaper the younger you are, but will also depend on your medical history and that of your close family. Some policies may offer to reduce the premium if they exclude a pre-existing condition, such as cancer, while some do not offer reduced premiums for exclusions
    • Some policies will cover more illnesses than others or may offer different benefits, such as waiver of premiums, which may make it more expensive
    • Some policies may be combined with life cover, which may make the critical illness element cheaper
    • Some policies may give you the option of reviewable or guaranteed premiums. Guaranteed premiums are more expensive, but you know payments will remain level throughout the life of the policy. Reviewable premiums may be lower, but prices could rise if, for example, new screening methods result in more claims
Many providers offer a different range of Critical Illness covers so it's important to seek Independent Financial Advice in this area as the cheapest premium may not necessarily provide you with the most comprehensive cover. More importantly, it may not pay out in the event of a claim for something you thought was covered, but which in fact it was not.

Last updated: 22/04/2010 14:28:34