Associated with a critical illness, of course , leads to a traumatic and worrying time. For many such sufferers, one of the immediate concerns is the very practical financial one of ongoing to make ends meet when it might no longer be possible to work – especially if there is also a family or other dependants to think of. Since critical illness insurance is typically designed to help allay some of those monetary worries, it might be worth looking quickly at exactly what critical illnesses are usually covered and how this particular insurance functions.
Although it is a normally quite fundamental question, there is no simple answer since different policies adopt different definitions of a “critical illness”. Before deciding on a particular insurer, therefore , prospective policy holders might want to examine closely the list of specified illnesses.
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As a general rule, of course , the more restricted the list, the particular cheaper the premiums are likely to be. And also this means that there is likely to be a policy available to suit most pockets.
Whatever the protection of critical illnesses, however , it could be noted that most policies exclude particular types of cancer and that some claims might be subject to the insurer’s own medical examination and assessment from the condition or illness.
How does this work?
The principles are simple plus straight forward. The policy holder pays a fixed premium each month and, in the event of them being diagnosed with a critical illness (as defined by the insurer), a single, tax-free, lump sum benefit is paid out towards the policy holder. The way in which such a benefit will be spent is entirely up to the policy holder, but might be used to replace lost income from work, to help account any alterations that might be needed to the existing living arrangements for a critically sick patient, or for buying in specialist nursing or health care.
Critical disease insurance provides cover for an agreed term – which might typically be as short as 5 yrs or longer. Some insurers, nevertheless , may offer a greater degree of versatility by allowing renewable term include, by which the policy holder is able to restore the policy at various periods (say, every five or ten years).
Other insurers have options that allow for the insured expression to run for the remaining life of the mortgage. In other words, this might be used rather than mortgage life insurance, whereby the risk of becoming diagnosed with a critical illness is covered for the term of the mortgage and the insured benefit might be calculated with reference to the outstanding mortgage to be compensated.
Combined critical illness and life insurance coverage
An increasing number of insurers now offer the accessibility to combining critical illness insurance with life cover. With such a mixed policy, a single monthly premium addresses the policy holder not only against the danger of being diagnosed with a critical illness, but additionally the guarantee of a benefit compensated to the policy holder’s nominated beneficiaries in the event of his or her death. Although the one premium is probably lower than the cost of covering against critical illness and purchasing life cover separately, policies are usually restricted to a single payout.
David Thomson is Chief Executive of BestDealInsurance a totally independent specialist broker dedicated to delivering their clients with the best insurance deal.