So what does it do?
Put simply, critical illness cover pays a sum of money (lump sum or monthly) if the policyholder is diagnosed with one of a wide range of qualifying critical illnesses.
Insurance companies provide cover for a set number of illnesses and the number of illnesses covered is different for every insurance company. Some cover around 50 illnesses and one covers over 100.
Critical = Serious, not terminal (you’re likely to survive but the effects could be severe).
Here’s a short list of some of the typical illnesses covered (source Legal & General Nov 2013):
Benign brain tumour
Heart valve replacement or repair
Loss of hand or foot
Loss of speech
Major organ transplant
Paralysis of a limb
Third degree burns
Total and permanent disability
Traumatic head injury
Yes. This type of cover is a very good idea.
If you are thinking about critical illness cover but you’re not sure if you want to go ahead with it then consider this:
1/ The chances of suffering a critical illness during the term of your mortgage or while your children are still young is surprisingly high (Legal & General claims statistics for 2012 show that over 50% of male critical illness claimants and more than 70% of female claimants were under the age of 50).
2/ Critical Illness Cover is now better than ever with insurers competing to offer the best cover. Most insurance companies now cover over 50 different illnesses and some cover over 100!
3/ Across the market the average percentage of critical illness claims that get paid is over 90%! (In 2012 Legal & General paid 93.1% of claims, Liverpool Victoria paid 91%, Aviva paid 92.5% and Bright Grey paid 93%)
One of the main reasons insurance policies don’t pay a claim is ‘non-disclosure’ – when key information is not disclosed on the application form.
Don’t rush into it. Speak to an adviser.
Each insurance company also has different ‘definitions’ for the illnesses they cover which, can make a difference to how severe an illness needs to be before a claim can be paid.
The price and quality of cover differs greatly across the market and with our experience we can advise you according to your needs and budget.