A Guide To Critical Illness Cover

Critical illness cover – historically, it’s not been the insurance policy with the best reputation for paying up, as shown by some of the high-profile cases that have been caught in the media spotlight. But, ‘the times they are a changing’ and the number of successful claims is on the up. Here is everything you need to know about Critical Illness Insurance Cover.



Help Meeting Your Commitments

Critical illness cover could be crucial if you don’t have sufficient savings to pay your household bills if you are off work sick. In fact, it’s been estimated that as many as two out of every five households don’t have any savings at all, so if you find yourself in that situation, look into taking out appropriate insurance cover.

It’s especially important that you have the right insurance if you’re self-employed or your employers don’t offer much in terms of salaried sick pay - a situation that is fast becoming the norm.


What Is Critical Illness Cover?

Critical illness cover can provide you with security if you are diagnosed with a very serious illness. Such cover usually takes the form of a tax-free large lump sum, paid on the diagnosis of a critical illness defined in the policy. The average claim for such a policy is a little over £60,000.


The Origins Of The Policy

It’s been around now for about 30 years, and critical illness cover has its roots in the concerns that cardiac surgeon Dr Marius Barnard had for his patients when faced with a critical illness.

In the intervening years, it’s a policy that’s given reassurance to countless people, for as the Association of British Insurers have found, approximately one million workers find themselves unexpectedly unable to work every year.


When Does It Pay Out?

The situation naturally varies from policy to policy, but critical illness policies tend to pay out when a serious illness is diagnosed. However, you should check the exact terms of your policy before you sign up, as there are variations from provider to provider.


How Many Conditions Are Covered?

Typically, critical illness policies provide cover for between 30 and 100 conditions. You might think you’d want the policy that covers the greatest number of conditions, but an alternative approach is to look out for policies that provide the most comprehensive cover for the most common conditions.


Degrees Of Cover

Critical illness cover has come on in recent years, and policies vary, with some covering other members of your family, while others might offer different degrees of cover depending on the illness for which you claim, with a more serious illness giving you a higher payout.


What’s Not Covered?

Before signing up, you should be sure to understand the conditions and limitations of your particular policy. Some critical illness policies don’t cover cancer for example, which is a concern given that half of us will be diagnosed with it at some point in our lives. So be sure to check the small print before committing.


For What Illnesses Are Claims Usually Made?

Despite the fact that some policies don’t cover cancer, when you look at the most common reasons for which people claim, cancer is right up there alongside strokes, heart attacks, multiple sclerosis diagnoses and benign brain tumours. As for the average age of claimants, that’s 45 years.

How Successful Are Claimants?

The percentage of successful claims made has been rising in recent years, but still around one in every 10 claims is turned down. If you are considering taking out a policy, you should check the percentage of successful claims specific firms have paid out – they should be published on their websites or elsewhere.


What Do Policies Usually Pay For?

Lumps sum paid as a result of a successful claim can be used however you like. Typically, claims are used to pay off outstanding debts such as a mortgage, and can be used to adapt your home or transport.


You Get What You Pay For

Remember, cheaper insurance is cheaper for a reason; it’s less likely to pay out, so bear this in mind when choosing your policy. You get what you pay for.


Policies Can Widely Vary

As with anything else you’re purchasing, it pays to do your research first and to shop around before you make your purchase. When it comes to critical illness cover, as we’ve seen, there are notable variations in the number of conditions covered, the definition of those conditions and the point of payout, so we would urge you to do your homework.


Be Open

Remember, the insurance business is based on risk and trust – so you need to open about any health problems from which you suffer or have suffered. All medical complaints you’ve suffered in the past or recommendations made by your doctors must be disclosed to insurers, even if they seem irrelevant.

Moreover, the job you do will play a part too, with some seen as a riskier proposition than others. Remember, if you are not completely open with your insurer at the beginning, any claim you make later on may well prove invalid, and you won’t have the safety net you were hoping for.  


When Don’t They Pay Out?

The most common reason for critical illness policies not paying out is the illness for which the policy holder is claiming not being covered by the policy. The next most common reason for claims being rejected is important information not having been disclosed.


Insurance In Combination

You might want to take out your critical illness cover in combination with other insurance policies such as an income protection plan or life insurance.

However, although this can prove cost effective, you should remember that if you take out a combined policy rather than separate ones, you are only ever likely to get one payout. So if you were diagnosed with a critical illness that then proved fatal, you’d be likely to receive a payment on diagnosis, but your family may receive nothing in the event of your death.


Your Insurance Needs

Although online insurance can be quick and easy and can work well in some instances, it’s best to speak to an experienced insurance broker to find insurance coverage that meets your specific needs.

Taking out critical illness cover could well be the sensible thing to do, providing you with reassurance and stability at a time when you need it most. Don’t leave it too late. Ideally, you should take out critical illness cover while you’re still healthy, so that you get the most comprehensive cover at the most competitive price.