Critical Illness
We have answered some important questions below to assist clients in their understanding of this releatively new form of insurance. We believe that Critical Illness insurance is a very important form of protection, one that fills a gap in most people’s exisiting cover.
Life cover is valuable, and provides peace of mind, but it protects the insured person’s dependants rather than the insured.
We hope you find this guide helpful and informative.
- What is Critical Illness insurance?
- Do I Need Critical Illness insurance?
- How much does Critical Illness Insurance cost?
- Which medical conditions are covered?
- Can I insure my child?
- What different types of policies are available?
- How much cover do I need?
- How do I buy a Critical Illness policy?
What is Critical Illness insurance?
Critical Illness insurance is financial protection that pays a lump sum cash benefit if you are diagnosed as suffering from one of the many specified medical conditions, illnesses, injuries and operations.
As this type of insurance pays you a lump sum whilst you are alive, it acts as a personal financial protection policy. In this it differs from traditional Life Insurance that protects your dependents after your death.
You select the amount of insurance (’sum assured’) and the length of time (’term’) you are covered, at the start of any policy. Premiums are related to your age and health at the start of the policy, and are normally paid monthly. Premiums can be guaranteed not to increase during the term of the policy.
The lump sum benefits paid due to a claim may be used for any purpose. This might be paying off debts, such as a mortgage on your home; adapting the house or car to accommodate a wheelchair; having a good holiday to recuperate, or fulfilling a lifetime ambition. Alternatively receiving a lump sum might enable you to change to a less stressful job without worrying about a drop in income.
Do I need Critical Illness insurance?
Most of us think ‘it won’t happen to me’, but unfortunately too many of us are wrong. There are numerous statistics showing how many people suffer from one illness or another, but the real truth lies closer to home – just ask yourself who you know that has suffered a major life threatening illness.
Although medical science has developed rapidly, and continues to improve the treatments available to fight serious illness and disease, it does not profess to have all the answers.
Longer life, plus changes in lifestyle, has meant that we now have to cope with a whole new range of illnesses and diseases. Instead of contending with dysentery, typhoid or tuberculosis, we are vulnerable to the 21st Century’s equivalents - Cancer, Stroke and Heart Disease.
Fortunately survival rates for these critical illnesses are improving all the time. But survival often brings additional financial problems, just at the wrong time. Recuperation from a critical illness can take many months or years, and can involve significant cost depending upon the type and severity of the critical illness.
The protection that insurance offers provides peace of mind, and can bring financial freedom, or alleviate financial problems, at an important time in your life.
Critical Illness Cover can be used to:
- Protect yourself
- Protect your family
- Protect your business
- Protect your Mortgage
How much does Critical Illness insurance cost?
Considering how much extra protection is offered by Critical Illness insurance the costs are very affordable and represent excellent value for money.
To see how much a policy would cost you, just use our online quote system – you will be pleasantly surprised!
The cost is dependent upon your age, sex and health at the time of application. The standard premiums shown on our quote system do not include any additional loadings, for example due to a pre-existing medical condition.
Which medical conditions are covered?
The specified medical conditions covered by each insurance company do vary, but all policies cover what are known as the six ‘core’ illnesses. These are:
- Cancer
- Heart attack
- Stroke
- Kidney failure
- Coronary artery by-pass surgery
- Major organ transplant
Additional conditions that are covered by some policies can include:
- Alzheimer’s disease
- Angioplasty
- Aorta graft surgery
- Aplastic anaemia
- Bacterial meningitis
- Benign brain tumour
- Creutzfeld Jacob Disease (CJD)
- Coma
- Heart valve surgery
- HIV/AIDS (restricted circumstances)
- Keyhole heart surgery
- Loss of independent existence
- Loss of limbs
- Loss of hearing
- Loss of sight
- Loss of speech
- Motor Neurone disease
- Multiple sclerosis
- Paralysis or paraplegia
- Parkinson’s disease (age limit)
- Pre-senile dementia (age limit)
- Terminal illness
- Third degree or severe burns
- Total Permanent Disability
- Valvuloplasty
Please refer to the individual company key features to check which conditions are covered before you purchase any policy. All of the above conditions are defined in the policy documents.
To ensure fairness, the Association of British Insurers (ABI) has specified model definitions for the majority of medical conditions covered by this type of insurance policy.
Can I insure my child?
At no extra cost, most policies also cover the children of the insured, up to a limit of £15,000 normally. Child cover is not as comprehensive and does exclude any pre-existing conditions at the time the policy in taken out.
What different types of policies are available?
Critical Illness insurance can be bought for a specified number of years (a ‘term’ policy) or for as long as you live (’whole of life’ policy).
Our online life insurance quote system is only available for ‘term’ policies. A ‘term’ policy is pure protection insurance for a set period of time; it does not provide any ‘cash-in’ value during the term.
It is also possible to arrange Critical Illness insurance as an additional benefit for Life Insurance or Mortgage Protection policies, so that benefits are payable on death or an earlier Critical Illness claim. This combination provides more complete cover, but having separate Life Cover is also important.
How much cover do I need?
This will depend upon your personal circumstances and how much you can afford to pay each month as a premium for any insurance policy. For most people the amount of cover selected is a compromise between what is possibly needed and what is affordable.
A critical illness may mean that you take unpaid time off work whilst recuperating, for a limited period, or it may mean that you never work again but still need to support your family for many years. It could mean that you need to purchase special equipment, a new home or car.
You should firstly consider an amount of insurance that would avert a financial disaster, an amount that allowed you to continue to meet all your household bills for a period of time. This might mean cover of between two and five times your earnings, for example.
Secondly you should consider whether you wish to insure against the need to buy special equipment or medical care. An insurance amount of up to £10,000 - £50,000 should be considered.
Thirdly, should you be unable to return to work due to the severity of the medical condition, you may wish to consider replacing your income for life. To calculate this amount you need to assume what income a lump sum would produce each year, so that it was sufficient to last throughout the remainder of your life.
For example if you earn £25,000 per year, an insurance amount of £250,000 would not be unreasonable.
Alternatively you can elect to use the insurance for a specific purpose, such as repaying your mortgage, in which case cover only needs to be for that amount.
How do I buy a Critical Illness policy?
Our online quote system allows you to request the application form for the policy of your choice.
Simply complete the form and return it to Torquil Clark Life Insurance and we will do the rest. The Insurance Company may ask for further information, either from yourself or your doctor, and may require you to attend a medical examination.
