Critical illness cover
Critical illness cover, also referred to as critical illness insurance, is a long-term insurance policy where you will get a tax-free ‘lump sum’ – a one-off payment – if you are diagnosed with one of the serious illnesses covered by your insurance policy. It’s designed to pay off your mortgage, debts, or pay for alterations to your home such as wheelchair access should you need it.
Your critical illness insurance will pay out if you get one of the specific medical conditions or injuries listed on the policy. Not all conditions are covered, so you need to check the small print very carefully. The policy will also specify how serious the condition must be.
Examples of critical illnesses:
Most policies will also pay out if you are permanently disabled as a result of injury or illness. It only pays out once and then the policy ends. Examples of critical illness: heart attack stroke certain types and stages of cancer conditions such as multiple sclerosis
Some serious illnesses might not be covered by a critical illness policy. For example, some cancers and ‘chronic’ or long-lasting conditions that could mean you cannot work might not be covered.
When might you need critical illness cover?
Health problems you knew you had before you took out the insurance are also very unlikely to be covered. Unless you have a combined life insurance with critical illness policy this type of insurance does not pay out if you die. There are different types of critical illness insurance policies available, so it’s important to know exactly what’s covered.
Don’t rely on benefits from the state to support you if you become critically ill – these are almost certainly less than you think. The money you get from a critical illness policy can be used to pay off a mortgage, to pay medical bills, home modifications or for anything else you might need.
How likely are you to make a claim?
Insurance is based on risk. How likely is it that you will make a critical illness claim? If you are young, fit, well, with a good family medical history and a healthy lifestyle, your chances of getting an illness severe enough to be covered by one of these policies might be fairly low. The older you are, the more chance you have of getting ill – but to reflect this, the premiums are higher and any pre-existing medical conditions will not be covered. Medical technology keeps advancing, which means that the impact of many illnesses is less serious than before. Screening techniques have also improved so that some cancers can be diagnosed earlier and treated before they reach the critical stage.