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Critical illness insurance usually pays out a one-off tax free lump sum on diagnosis of a serious illness covered by the policy.
The money can be used for anything. Some people use it to pay off their mortgage or other debt, others might use it to pay for any alterations to their home (such as wheelchair access).
Cover can be included as an additional benefit of a life insurance policy or it can be a stand-alone policy.
What does critical illness insurance cover?
Some of the illnesses covered include; heart attack, stroke, certain types of cancer and conditions such as multiple sclerosis. The policy documents will explain how serious these illnesses should be before it will pay out.
Many policies will also pay out if the policy holder becomes permanently disabled because of an injury or illness.
Partial payments may be available for illnesses that the insurance company deem to be less ‘severe’.
Children’s Critical Illness
Sometimes policies include cover for children. This means if the policy holders child is diagnosed with one of the specified illnesses, a lump sum will be paid out.
The amount paid in these circumstances is normally less than the amount the policy holder is insured for. The policy documents should say how much this would be.
Usually, a claim against children’s critical illness wouldn’t affect the amount of cover under the main plan.
What’s not covered by critical illness insurance?
Some less advanced cancers and ‘chronic’, or long-lasting conditions might not be covered, even if they stop the policy holder from being able to work.
MS is a common illness and it’s not uncommon for critical illness payout for MS.
Health problems the policy holder knew they had before they took out the insurance are unlikely to be covered, unless the insurer agreed to offer cover against these health issues.
Unless the policy is a combined life insurance with critical illness policy, this type of insurance doesn’t usually pay out on death. It may also specify that the policy holder must survive for a specified number of days after their diagnosis to be able to claim.
If the insurance is to protect a mortgage, it’s important to remember that the amount paid after a successful claim would only be the amount covered by the policy. So, if the policy holder plans to borrow more money on a mortgage, or move house, it’s a good idea to review the amount of insurance in place.
There are different types of critical illness insurance policies available, so it’s important to know exactly what’s covered.
When might critical illness cover be needed?
It’s important to think about what bills would still need to be paid if you suffer from a serious illness like cancer.
If state benefits (which are often less than people think) wouldn’t be enough to keep meeting these monthly/weekly commitments, and there aren’t any alternative measures in place like savings or employee sickness benefits, critical illness cover might be an option.
How long does a critical illness claim take?
A Critical Illness claim can take between 4-8 weeks.
How much does critical illness cost?
It’s important to remember that insurance companies look at ‘risk’ when assessing an application and will determine the likelihood of having to pay out during the term of the policy. If this risk is too great, they may decline the application or accept it with higher premiums.
Things that affect the cost of a critical illness policy include:
- Age
- Health – whether a person is overweight, family medical history and their own medical history
- Lifestyle – if a person smokes, or has smoked previously and the amount of alcohol they drink
- The person’s occupation
- The amount the person would like to be covered for
A budget will help to work out how much you can afford to pay for insurance. The level of cover might need to be reduced, or savings may need to be made in other areas to make it affordable.
Critical illness claim rejected
If you have a critical illness claim rejected you can get free information and guidance at Resolute Claims.
Insurance claims advice
If you are looking for advice to make a claim there are many idenpendant organisations you can visit you can contact these organisations if you are having a problem with insurance company. The Financial Ombudsman Service can also help you make a complaint, free of charge.
