12 Days of Christmas - Day 2, Critical illness cover

On the second day of Christmas

Cura gave to me

Critical illness cover

Critical illness cover provides you with a tax-free, lump sum of money if you are diagnosed with certain critical illnesses. Often things such as heart attacks, stroke and cancers are included, however each insurer will have their own list of covered conditions. On the current market, you could be insured from anywhere between 43 and 161 illnesses.

It’s sad to say that critical illnesses certainly don’t discriminate, and people of any age can receive a diagnosis. Having a plan in place as a backup can really reduce some of the stress you may be faced with, if you are diagnosed with a critical illness. Some policies also included children’s critical illness cover, which can offer some support in the worst of times.

But What Are the Odds?

Of course nobody wants to think about being diagnosed with a critical illness but with odds such as 1 out of every 2 people being diagnosed with cancer within their lifetime (NHS Choices, 2019), it is worth thinking about having protection in place just in case. 

You don’t have to spend the money from a claim on anything specific, it can be used for a number of things such as to pay off your mortgage, to make adjustments to your home or lifestyle to make things easier for you, or you can even buy yourself a holiday as something to look forward to.

Being diagnosed with a critical illness certainly doesn’t mean you have to stop going about your day to day life, but some people need to reduce their hours at work or take personal time to have treatment and recover from them.  You might need time to cope with the effects of any medication you need to take. A lot of people choose to alter their lifestyle at least slightly, to make day to day living more comfortable. Using a payment from a critical illness policy can help with this massively.

We are used to calling it critical illness cover, but you may also see critical illness insurance, critical illness assurance and serious illness cover. Though the names are all slightly different, they are all similar in the sense that you pay a monthly premium to insure your health and you will receive a tax free sum of money in the event of a successful claim.

Quite often, people may have a policy which covers them for life insurance and critical illnesses together, though critical illness cover can be purchased as a standalone policy.

Some Technical Bits 

There are some specifics to bear in mind with critical illness cover. Most insurers will cover around 50 different conditions, but it’s important to understand that quite a few come with a ‘severity’ rating. This means that you will see things like ‘cancer – of a specified severity’, ‘heart attack – of a specified severity’, or ‘Parkinson’s – with lasting symptoms’. Each insurer has a slightly different mix.

Another rule is that you usually must survive for at least 14 days from diagnosis. This is known as a ‘survivability clause’. If you die within this time frame, and you have chosen not to combine it with life insurance, then the policy won’t pay out. This is why when you speak to our advisers we will usually suggest that you include life insurance in your critical illness policy, so that if you do unfortunately pass away, the claim transfers to a death claim.

Pre-existing Health Conditions

All medical conditions, hazardous pastimes, occupations and foreign travel will need to be disclosed to the insurer when submitting your application, and the terms that you’re offered will be based on your answers. Insurance is based upon risk and most insurers will ask these questions to determine how much they feel you need to pay for the cover. Insurers do not usually ask the exact same questions, so one might ask a question that makes it tricky to get the cover with them, but then another might not ask the question at all.

The options you have when it comes to critical illness cover can be influenced by your current health. Some health conditions can make it more likely for you to develop a critical illness, that means that there is a higher chance of you making a claim on the policy. When reviewing your application, the insurer will try to assess the likelihood of you being diagnosed with a claimable condition based upon your own and your immediate family medical history, and the terms they offer will be based on that. 

It could be that your offered standard terms, in which there is no price increase or exclusions added onto the policy. You could also receive terms with an increased premium or with certain things excluded. In extreme circumstances it could be that the insurer would decline you cover altogether. At this point it would be especially handy to speak with a protection insurance adviser who can look at some alternatives for you. This might be through specialist insurers or through specific policies that can be set up through Limited companies.

Using a protection insurance adviser is more often than not beneficial, but especially when applying for critical illness cover. It’s super important to know exactly what you’re covered for, and a protection insurance adviser will be able to find you the best terms available. Being in the industry for so many years really does come at an advantage!

Resources

NHS Choices (2019). Overview – Cancer. [online] NHS UK. Available at: https://www.nhs.uk/conditions/cancer/ [Accessed 24 Nov. 2021].