Critical illness insurance explained

There are certain events in life that make us ponder on the things that are important specifically to us and it may be different for each of us. On the one hand, the father with three children may ponder heavily on how his loved ones would fare if he were no longer able to work. Similarly he may question their future if her were not in it at all, the same occurrence may be on the mind of a 23 year old successful banker with the lifestyle to match. While he may not have the dependants he may ponder on how his lifestyle would be affected if he were suddenly unable to work?

These ponderings usually lead the individual to look into the protection offered by critical illness insurance. With so many insurance companies on the market, each one having their own portfolio of policies it is hard to decide which cover would be the best for you. By taking the time to ruminate over certain points you should have a better sense of direction when it comes to choosing your insurance policy.

WHAT WILL CRITICAL ILLNESS COVER?

In the event that you are diagnosed with a critical illness such as cancer the policy will usually pay out a lump sum that is tax free which you can use to aid with any adaptations needed or simply to pay the bills. Critical illness cover should not be confused with private medical insurance which one can use to pay the costs of medical treatment by a private doctor or specialist. Similarly this form of insurance is different to income protection insurance which will pay you a monthly amount once you have been declared unfit for work for an agreed period of time.

Different policies will offer cover for different illnesses and it is important you are choosing a policy that gives you the level of protection you want. All critical illness policies cover ‘core' illnesses, these are cancer, stroke and heart attack. Taking the time now to choose the right policy will ensure you are not left in a vulnerable situation at the most inconvenient time possible.

It is important to note that there is no universal list of ‘critical' illnesses, each insurer will have their ‘core' list of illnesses covered and usually a second list with ‘optional' additional illnesses that can be considered critical enough for them to pay out for. Most will pay out for a person undergoing coronary artery by-pass surgery however not all would consider a heart valve replacement or repair ‘critical'. With that in mind it is vital to get all the things that you would consider ‘critical' covered and not assume the provider's list will mirror your expectations.

WHAT'S NOT COVERED?

Exclusions to the protection a policy offers will vary from insurer to insurer and must be accounted for when selecting your critical illness insurance. Some of the most common exclusions include HIV/AIDS consequences of drug abuse and any self inflicted injury. Similarly, if you fail to follow the medical advice you have been given to aid your recovery from an injury or illness and there are negative ‘critical' repercussions then the insurer is unlikely to write you any cheques.

As the underwriters for your policy will have calculated risks associated with you and your lifestyle based on life here in the UK, moving abroad could invalidate your policy, leaving you vulnerable. On the same vein, insurers appreciate that new events in your life are likely to affect your risk factors and are willing to accommodate. For example, if you have recently had a child your priorities are likely to change and so too your risk levels. Increasing your cover to keep up with the current levels of inflation or because you have recently married are acceptable reasons and are somewhat advised, it is important to keep in mind that an increase in cover is likely to increase the price of your premiums.