Present statistics show that approximately a quarter of the present UK population will be afflicted by some kind of major illness before we get to that magic goal, retirement.

Now because of the advances in medical treatment, even contracting a very serious illness or condition may not mean the end. However, even though the medical profession can now cure or treat most serious illnesses, they cannot and do not provide financial assistance for the time it may take to get to the end of the long road to recovery.

This is what Critical Illness Cover also known as Dread Disease Cover provides for.

Critical Illness insurance pays out a tax free lump sum if you are unlucky enough to contract a serious illness or have to undergo specific types of surgery.
Typical medical conditions and illness are:

Heart Attacks
Stroke
Coronary artery disease needs surgery
Organ Transplants
Certain types of cancer
Kidney and Liver failure
Loss of hearing, sight or speech
Multiple sclerosis

On the other hand, there are a number of activities and conditions that will not be covered by Critical Illness Insurance cover, some of the standard activities are listed below.

Please note, you must check with your critical illness insurance provider to ascertain just exactly what is and what is not covered.

Flying
Criminal acts
Drug and/or alcohol abuse
Medical advice
Dangerous sports and hobbies
Living abroad
Self-inflicted injury
War

Do I need Critical Illness Insurance Cover?

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Again like all forms of insurance, you need to weigh up the risk against the cost. Regarding critical insurance cover, you need to ask yourself what would happen financially to you and your family if you were struck down by a critical illness such as cancer, heart attack etc. Critical illness insurance cover allows you to have the reassurance that if you were unlucky enough to contract a critical illness, you would still be financially sound and able to repay any outstanding commitments.

Find the right Critical Illness Insurance policy

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With over 50 critical illness insurance policy providers offering over 200 types of critical illness insurance cover, choosing the right critical illness insurance cover might become somewhat confusing. The first thing to do is decide what illnesses and conditions you will need critical illness insurance cover for. The more illnesses and medical conditions that are covered within the critical illness insurance policy, the higher the critical illness insurance premium will be. So unless you are thinking about exploring the jungles of the Amazon or the tropical rain forests of Peru, I suggest you do not take out a critical illness insurance policy that covers you against catching every tropical disease known to man.

Conversely, don’t try to save money on taking out the cheapest critical illness insurance policy, as it will most likely have very limited critical illness insurance cover.

Always double check what is covered and what is not covered by the critical illness insurance policy and always read the small print (remember the smaller the print the more likely there is a catch).

Some critical illness insurance policy brokers/companies will provide you with a standard document showing the main features of the particular critical illness insurance policy you are interested in, giving details of what critical illnesses and medical conditions are covered and what critical illnesses and medical conditions are not covered. This will enable you to compare different critical illness insurance policies.

Applying for Critical illness insurance cover

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The majority of critical illness insurance providers accept people within the ages of seventeen to seventy. There are two major types of Critical Illness Insurance cover that can be taken out by the policyholder.

1. Level Term or Fixed sum Critical Illness Insurance cover
The sum assured is fixed and therefore the amount of cover remains the same throughout the term of the policy. This type of critical illness insurance cover is mainly taken out so as to cover the cost of an interest only mortgage and for protecting the family.

2. Decreasing Critical Illness Insurance cover
The sum assured decreases throughout the term of the policy. This type of critical illness insurance cover is mainly taken out so as to cover the cost of capital and interest repayments against a mortgage.

Having decided on what type of critical illness insurance cover you require, the next thing is to decide for how long you will need to take out critical illness insurance cover and how much money (the assured sum) will be paid out by the critical illness insurance policy in the event of a claim. As with all applications for insurance, you will have to fill in a form, you will be asked to submit details of any major illnesses you or your family have suffered in the past. You may also be asked to take a medical examination although this does not mean you will be liable for higher premiums. Other questions regarding your lifestyle (e.g. Are you a smoker). The cost of critical illness insurance premiums is calculated on many things including gender, age, amount assured, length of policy, medical history and state of health so the cost of critical illness insurance premiums is very much based on the requirements and condition (health wise) of the individual.

If you are thinking of taking out a joint critical illness insurance policy for both you and your partner, you should be aware that in most cases the critical illness insurance policy will only pay the lump-sum to the first person who becomes critically ill.

If you are seriously thinking of taking out critical illness insurance cover, you need to complete your application as quickly as you can. Critical illness insurance premiums are constantly rising due to the increasing cost of advances made in the medical profession.

Critical illness insurance providers are constantly reviewing what constitutes a critical illness and in some cases, critical illness insurance premiums have risen 50% and are expected to rise even more in the future.

Remember that the majority of critical illness insurance policies will have a cooling off period (usually fourteen days). This gives you the opportunity that if for some reason you have a change of heart and do not want to go ahead with the critical illness insurance policy, you may cancel it at anytime within the 14 days.

Claiming against your Critical illness insurance

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For most cases the payment made by the critical illness insurance policy is a one-off lump sum usually between 100,000 GBP and 250,000 GBP.

Payout times are usually within a month after a diagnosis of a serious illness or condition is confirmed, however if the critical illness insurance policy holder suffers a permanent disability, payout will take longer, about six months to a year.

Because the majority of critical illness insurance policies stipulate that the one-off lump sum payment is only paid out to survivors, the importance of having a critical illness insurance policy that pays out in the shortest possible time is a distinct advantage.

Many critical illness insurance policies will pay out the one-off lump sum providing that the policyholder survives a minimum of fifteen days.

Making the best use of the payment

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Now except for those of you who want to emulate Ben Gazzara in ‘Run for your life’, one of the major benefits of critical illness insurance cover is that is gives you the time, security and peace of mind to come to terms with the situation and make the right decisions on what changes you need to make to continue to live a relatively normal life.

Decisions such as paying off the mortgage, clearing loans, providing home help or childcare, all these actions need to be considered over a period of time.

Summary

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Of course none of us think that ‘it will happen to me’ but as I stated in the start of this guide, around 25% of us suffer from some form of critical illness before we reach retirement. I hope this guide has been useful to you and given you a few ideas, I also hope that you never have to make a claim against your critical illness insurance policy.

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