What is Critical Illness Cover?

Critical Illness insurance, or ‘Dread Disease Cover’, was originally developed in South Africa and has been extended to the UK in the last few years.   The policy pays out on the diagnosis of certain specified Critical Illnesses.   Due to advances in medical care, many people suffer major life-threatening illnesses, such as a heart attack or stroke, and may not be able to continue working. 

Critical Illness cover is not an alternative to life assurance.  It is designed to meet a distinctly separate need.  It provides a lump sum to assist you to overcome the physical, emotional and financial traumas that would accompany the diagnosis of serious disease.  The funds provided by the critical illness insurance may actually aid your recovery by providing financial peace of mind. 

Critical Illness insurance pays out a tax-free lump sum on diagnosis of a range of critical illnesses, from kidney failure to multiple sclerosis.  This cash lump sum gives the insured security and the ability to rebuild your life.   It enables people to reassess their lives and fulfil life-long ambitions.   With reductions in benefits and hospital closures it is clear that healthcare is definitely embarking on a revolution and protection policies are just a tip of the iceberg. 

Critical Illness insurance involves similar procedures to Life assurance in that, for example, completion of a proposal form will be necessary, giving full medical details and family medical history.   Underwriters assess the risk and accept, rate or decline as appropriate. Because of the much higher risk to life offices, premiums are substantially higher than those for the basic life cover.

In most cases, the product providers limit the level of critical illness cover that you can have to a multiple of five times your annual income.  Most companies will consider higher levels of cover for specific reasons, such as to cover a loan.  In addition, critical illness is not usually the most effective way of replacing income in most circumstances.

However, as critical illness cover is not cheap, for those who do not wish to insure themselves for the maximum amount, we recommend the minimum level of cover should be sufficient to repay all outstanding debts with a small amount extra to help pay for any lifestyle changes necessary.

There are millions of people suffering from a wide range of conditions that are covered under a critical illness plan.  It is not too hard to think of a family member, a friend, a work colleague or even an acquaintance who is suffering or has suffered from a serious illness.

With these statistics in mind it is surprising that many of us place greater importance on our cars, homes and contents than our health and physical well being.  Many still believe that during times of critical illness the government or our employer would pay us enough money to be able to maintain our current standard of living.  However, there is no legislation forcing employers to do this, and the state benefits are insufficient.

The chances of surviving a critical illness are now much greater thanks to advances in medical science and surgical technology, such as heart and kidney transplants, chemotheraphy and other cancer treatments.  This has meant that a number of people who would otherwise have died now live longer and therefore need financial support to enable them to maintain their current standard of living. 

To speak to one of our fully qualified independent financial advisers now either phone 0871 433 3700 or click the contact section on the bottom of this page and someone will speak to you straight away to help you with your life assurance choices.