What is Critical Illness Insurance?

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.

There are a number of illnesses that are included in these polices besides heart attack, stroke, and cancer. The list of critical illnesses that are covered will vary greatly depending on the insurance company that you are using. This is another reason why it’s good to speak to an experienced life insurance specialist who will know more about the industry.

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.

Illnesses that are included in this document include loss of speech, paralysis of limbs, a major organ transplant, traumatic head injury, and things like coronary artery by-pass. Some of the illnesses will have specific requirements like “burns to the body”, which “must cover at least 20% of your body’s surface.” One of the other examples is HIV infection. To be considered you need to have caught HIV from a blood transfusion or a physical attack while living in the United Kingdom.

The Key Facts Document can be obtained by most life insurance brokers or by going online to different insurance provider’s websites. This information explains the illnesses covered in a clear and concise way. With many of these policies, total permanent disability cover will be included as an bonus feature.

A lot of UK residents choose to purchase critical illness cover for their children, which would pay out at around 25% of the policies sum assured. These children’s policies are usually capped at a certain amount though.

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.

Being prepared and informed when buying any life insurance policy is important and especially critical cover. Its good to know about all of the possible exclusions that might be involved for things like dangerous pastimes and sports, drug abuse, alcohol abuse, criminal acts, self injury, and even things like living abroad. The idea is that living abroad may be dangerous to your health.

Most insurance providers will use similar definitions and include their own exclusions if necessary. A typical exclusion would be something like a non-disclosure of a medical detail such as one of the listed illnesses. Before signing the policy and paying your premiums you should make sure that these exclusions do not put you at risk. If they do put you at risk there may be no point in getting an insurance policy. For that reason, you should make sure you speak to a qualified adviser and tell them the truth.

You can usually bundle your insurance products together to save money. So a normal package would include life insurance cover, Permanent Health Insurance, and Critical illness cover. All of these things might not be necessary for your specific needs but a lot of people would rather be safe than sorry.

Want to find out more about critical illness, then visit Vern Eaton’s website today.