Critical Illness Cover

Critical illness cover is a form of insurance that pays out a tax-free lump sum if you are diagnosed with one of the life-threatening conditions defined in the policy. The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation.

The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed. The survival period used varies from company to company, however, 28 days and 30 days are the most common survival periods used.

Most policies often combine life insurance and critical illness cover. These pay out either upon death or diagnosis of a critical illness, whichever comes first.

What is covered

Not all policies cover all critical conditions but the general industry guidelines say that to be defined as critical illness cover it must provide for severe heart attacks, advanced stages of cancer or a stroke if it results in permanent symptoms.

In practice most policies cover more conditions that the aforementioned, most basic plans will typically offer coronary bypass surgery, multiple sclerosis and organ transplants.

More inclusive policies will cover for a wider variety of conditions such as going blind, deaf or becoming too disabled to work. Some policies will even cover the loss of a limb.

What is not covered

All critical illness policies must cover strokes, cancer and heart attacks to be defined as a critical illness plan.

As with all types of insurance, it will only provide cover for conditions that are defined in the original policy documents. Bear in mind that for you to be able to claim your condition must meet the policy definition exactly. This means that some diseases, like some forms of cancer, will not be covered if not deemed severe enough.

Also, some policies will not cover you if you are diagnosed with a condition above a certain age e.g. you may not be covered for Alzheimer’s after the age of 60.

Additionally, most policies will not cover claims such as self-inflicted injuries, participating in hazardous or dangerous sports, alcohol and drug abuse or war injuries. HIV is generally not covered unless it was caught from a blood transfusion, you suffered a physical assault or work in the emergency services or a medical profession.

Very few policies will pay you a lump sum on diagnosis of any critical conditions. Typically most policies will only pay out after an initial ‘survival period’ or around 28 days. Should you die during the 28 day ‘survival period’ then the policy would not be paid.

Purchasing critical illness cover

Because policies vary drastically from one provider to the next it is recommended that you seek expert financial advice to help you scour the market and find the most appropriate plan for your needs.

A good adviser will be able to search the market for the best plan and also advise you if whether critical illness cover is really appropriate to your needs. They should be able to help determine how much cover you require, how long the policy should last and whether you should combine critical illness and life cover.

If you are already suffering from a critical illness then there is no need to purchase a policy, as none will pay out on pre-existing conditions. It is also possible that you may be refused cover if you have already seen a doctor about a health problem that later turns into a critical illness.

Premiums

How much you pay will be determined based on your type of policy, level of cover, your age, whether you are a smoker and also the amount you would want the policy to pay out.

Making a claim

The process for making a claim is stated in the guidelines of your policy. In most cases they will ask that you have been diagnosed by a specialist or consultant at a UK hospital who specialises in the area of medicine appropriate to your condition, so seeing your GP may not be enough.

Furthermore, if the condition you are inflicted with does not meet any of the criteria listed in your policy, your claim will be rejected.