Critical Illness Insurance

Get Critical Illness Insurance Advice and Help

Critical illness covers against serious and life threatening illness.  Critiical illness insurance developed originally in South Africa and has been available in the UK since the 1980's.

Critical Illness insurance, sometimes called 'serious illness' or 'dread disease' cover usually pays a tax free lump sum if you suffer or receive treatment for one of the core conditions covered.

Core Illnesses (the usual illnesses covered) and the core exclusions have been agreed by insurers via an Association of British Insurers (ABI) Code of Practice.

Core Illnesses Usually Covered

• Alzheimer’s disease [before age x]
• Aorta graft surgery
• Benign brain tumour
• Blindness
• Cancer
• Coma
• Coronary artery by-pass grafts
• Deafness
• Heart attack
• Heart valve replacement or repair
• HIV infection – caught through work/accident/blood transfusion
• Kidney failure
• Loss of speech
• Loss of hands or feet
• Major organ transplant
• Motor neurone disease [before age x]
• Multiple sclerosis
• Paralysis of limbs
• Parkinson’s disease [before age x]
• Stroke
• Terminal illness
• Third degree burns - covering 20% of the body’s surface area
• Traumatic head injury - resulting in permanent symptoms

Core Exclusions

• Alcohol or drug abuse
• Criminal acts
• Flying
• Hazardous sports and pastimes
• Living abroad
• Self-inflicted injury
• Unreasonable failure to follow medical advice
• War and civil commotion

Definitions for the above:  Clearly, all illnesses above have much wider definitions than the 'one line' phrase we have given.  For example Deafness - in reality the full definition is total and permanent loss of hearing with further caveats.

Can I get cover in excess of the Core Illnesses?

Yes, from a competition angle, many insurance companies offer a wider range of illnesses than those under the minimum ABI Code of Practice. 

This means that the cheapest premium is not necessarily the best cover.

Three ways of covering yourself in the event of critical illness:

• As an option added to a life assurance policy
• As a stand alone policy for a set term of years
• As a stand alone policy for the whole of your life

For more help with critical illness cover contact us today.

1.  Critical Illnesses: Protection and Insurance Advice 

There are four main serious illnesses that are usually covered under critical illness insurance policies.  These are:

• Cancer
• Stroke
• Coronary Artery Disease
• Heart Attack

Some or all of the following may also be covered:

• Terminal Illness
• Multiple Sclerosis
• Major Organ Transplant
• Paraplegia
• Parkinsons Disease
• Kidney Failure
• Paralysis
• Loss Of Sight/Hearing
• Permanent and total disability

ABI Core Illness Definitions

Insurance companies agree a standard life of core illnesses and definitions to be covered via the Association of British Insurers (ABI).  Many may have additional illnesses that they cover to make their policies more attractive to potential clients.

Critical Illness Insurance Option: Protection and Insurance Advice 

Critical Illness Cover as an Option to a Life Assurance Policy

This type of policy usually covers you if you die or if you suffer from a critical illness.

Some policies cover you for both but only pay out once and other, more expensive policies can pay out if you have a critical illness and again if you die.

Depending on the type of Life Assurance policy you have, you may be covered for death and/or critical illness for a specific term or for the whole of your life.

You can of course arrange separate standalone critical illness term or whole of life critical illness plans.

2.  Critical Illness Insurance Term: Protection and Insurance Advice

Factfile: Critical Illness Term Cover

Brief Description:

Critical Illness insurance term as a standalone policy for a set number of years covers you, should you suffer a critical illness within a fixed period.  A standalone policy can be beneficial if you already have the amount of life insurance cover needed.  These policies generally pay out when a critical illness has been diagnosed and the policy will then cease.  If you do not make a claim on the policy during the term, it will end with no value.  Some companies allow you to take out a further policy with them after a specified period, following the diagnosis of a critical illness.  Having the option to effect another policy can be beneficial to people who have had a heart attack and then recovered.   Because it is possible they will have another heart attack, further cover can give extra peace of mind.   

It is usual for companies to now offer a benefit known as 'Permanent And Total Disability'.  If, during the term of the policy, you were to become totally disabled and it was considered to be permanent, the insurance company would then pay out the benefit as if you had suffered a critical illness.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes

Reviewable Premiums Available: Yes

Critical Illness Insurance included: Yes

Life Insurance included: No - only as a option with a life insurance policy

Income Protection Insurance included: No

Period of Cover: Fixed Term

Increase Cover option: Yes, normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: No

Waiver of Premium option: Yes

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: No

Tax Benefits:

• Private policies - Benefits are tax free
• Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Not usually 

Suitable For:

• Adults
• Family Protection
• Mortgage Protection
• Business Protection

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested.  No Limit.

3.  Critical Illness Whole Life: Protection and Insurance Advice 

Factfile: Whole Of Life Critical Illness Insurance

Brief Description:

Critical Illness cover as a stand alone policy for the whole of your life covers you, should you suffer a critical illness only.  This can be beneficial if you already have the seperate amount of life cover you need in a seperate policy.  Critical Illness Whole Life policies generally pay out when a critical illness has been diagnosed and the policy will then cease.  Some companies allow you to take out a further policy with them after a specified period, following the diagnosis of a critical illness.

By taking out a stand alone policy for the rest of your life, you will have peace of mind, knowing you are always covered, should you become seriously ill.  Having the option to effect another policy can be beneficial to people who have had a heart attack and then recovered.  Because it is possible they will have another heart attack, further cover can give extra peace of mind.  It is usual for companies to now offer a benefit known as 'Permanent And Total Disability'.  If, during the term of the policy, you were to become totally disabled and it was considered to be permanent, the insurance company would then pay out the benefit as if you had suffered a critical illness.

Regular premiums payable: Yes

Guaranteed Premiums Available: Yes - but only for certain types

Reviewable Premiums Available: Yes - but only for certain types

Critical Illness Insurance included: Yes

Life Insurance included: Can be added as an option

Income Protection Insurance included: No

Period of Cover: Open Ended

Increase Cover option: Yes normally medical evidence required unless special events such as marriage, new children, further mortgage options included

Decrease Cover option: Yes

Waiver of Premium option: Yes - for certain types

Lump sum pay out: Yes

Regular amount pay out: No

Any investment cash in value: Yes - for certain types

Tax Benefits:

• Private policies - Benefits are tax free
• Business policies - premiums or benefits are potentially subject to tax incentives, not usually both

Benefits can be put in trust: Not normally

Suitable For:

• Adults
• Family Protection
• Mortgage Protection - not usually used for this though
• Business Protection - not usually used for this though

Insolvency Compensation Limits: Insurance Company Funds - 90% of total funds invested.  No Limit.

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