23 - 2012

An Introduction to Critical Illness Insurance

Critical illness insurance is designed to provide cover to offset the financial impact of serious illness.  The best critical illness insurance policies will typically cover around 40 potentially life threatening conditions, such as heart attacks, strokes and certain types of cancer, and will usually pay out following the diagnoses of a UK registered medical consultant who is recognised by the insurer.

Many people take out critical illness insurance alongside life cover.  This is a logical step to take, as the kinds of serious conditions covered by critical illness insurance tend to demand a prolonged period off work for the sufferer, even if treatment is successful and recovery is likely.  The resultant loss of income can have the same financial fallout as an untimely death.  A critical illness insurance claim payout can help to plug the gap in the household budget if serious illness strikes, and alleviate one of the possible causes of stress (lack of money) that can hinder recuperation during a challenging time.

Unlike life cover, critical illness insurance is, understandably, a bit more complicated.  While the cause of death is important for life insurance claims, with certain types of misadventure (such as drug abuse) voiding many policies, most claims are fairly straightforward.

In contrast, the majority of conditions covered by critical illness insurance have very specific conditions regarding the origin of, or way that the condition developed, and also the kind of treatment that resulted.  For example, certain types of cancer will be covered, while others are excluded.  HIV infection may well be covered, but only if contracted through specific circumstances, such as blood transfusion or a physical assault – again, if drug use was the cause of infection, you won’t find a critical illness insurance policy out there that provides cover.  Other conditions will only result in a successful claim if the symptoms experienced are permanent.

As well as qualifying medical conditions triggering a claim, many critical illness insurance policies will also pay out if illness or an accident leads to total and permanent disability.  The definition of this condition tends to relate to the policy holders occupation, and the physical requirements of their work.

All insurance policies demand close inspection to make sure that the cover actually provided is fully understood, and this is particularly the case with critical illness insurance.  In practice, this means reading the small print thoroughly – there is no such thing as a ‘standard’ policy in the world of insurance.  For more information about what to consider when looking at critical illness insurance, look here.

The complicated nature of critical illness insurance, and the potential lottery involved – in the unfortunate event of developing a serious condition that is not covered by a policy – may be off-putting to some.  However, the fact is that the average person is five times more likely to have a heart attack or develop cancer than they are to die before retirement age.  Viewed in this light, critical illness insurance can be seen as at least as important as life cover, particularly to those with dependants and a mortgage to pay off.

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