Critical Illness Cover Explained
The Association of British Insurers (or ABI) recently proposed a document known as the “Statement of Best Practice for Critical Illness Cover.” The document says that a critical illness cover plan will pay out a lump sum figure if you should meet the definitions of the following illnesses: stroke, cancer, and heart attack.
If you are diagnosed with one of these illnesses during the term of the policy then your insurance provider will be required to pay out a lump sum figure.
Each provider will have a different list of illnesses that they cover besides cancer, heart attack and stroke (which are covered on every policy). It’s important to know that your life insurance adviser is able to explain these details to you so that you know you are being covered for the right things.
The British Insurers Association has put together an exhaustive list with definitions of all the possible critical illnesses but each insurance company will choose which policies they want to cover. Currently, there are 23 definitions under the ABI’s Statement of Best Practice for Critical Illness Insurance.
These definitions will include things like blindness, Alzheimer’s, HIV infection (contracted under specific circumstances), aorta graft surgery, deafness, and coma. Many of these illnesses will have very specific definitions that include or exclude certain elements. A perfect example is kidney failure, as you will need to be on dialysis to qualify for this critical illness. Another one is MS because it will only be considered a critical illness if the symptoms persist for a specific amount of time.
A good way to compare policies with different providers is by reading their Key Features Document and checking which illnesses are covered with which policies. One extra option that a lot of providers include with these policies is Total Permanent Disability as an illness.
Many citizens of the United Kingdom buy critical illness insurance for their children because it will pay out a portion of the policies sum assured. Children’s policies are usually capped but a lump sum payment could help your child deal with the repercussions of a severe illness.
A lot of critical illness cover policies have extra benefits that can be included at an added price. For example, there are certain forms of critical illness insurance that provide a waiver of premium that can cover the payments when the policyholder become sick and/or unable to work.
All of the policies will have certain exclusions that will void your policy so make sure you are aware of these. This could include things like unreasonable failure to follow medical advice, war, drug abuse, and flying among other things.
Different insurers will have different definitions of their exclusions so if you partake in something like a hazardous sport or pastime you’ll want to understand the risks of your policy.
Before you sign a policy you should make sure that you know the risks because exclusion could mean that you receive nothing – and for that reason there may be no point in purchasing insurance in the first place. Speaking to a knowledgeable adviser should solve that problem though.
In many cases you can package your critical illness policies with other products that will give you a full protection plan that suits your requirements. These products include your basic life insurance policy as well as Permanent Health Insurance (usually called Income Protection).
Want to find out more about critical illness, then visit Vern Eaton’s website today.
