How Critical Illness Cover

Posted by Rafia / at 2:29 PM / /

Critical illness cover is not a medical or income protection but insurance that pays out if you are diagnosed with one of several major conditions.

The keys to critical illness cover are:

• A doctor only needs to diagnose a specified illness for the policy to pay out

• The policy does not pay medical expenses although you may choose to spend the cash on treatment for your condition

• The policy does not replace lost income

• The policy only pays out once, so if a doctor diagnoses you have a specified illness, if the claim is settled, and you are unfortunate enough to have a second specified illness, the policy will not pay again.

Now you know what the cover does not do, look at the features:

• Critical illness policies list illnesses that are covered and any the conditions that the insurer requires proving before settling a claim. The policy does not cover all illnesses, only those specified in the policy documents.

• Generally pre-existing conditions are excluded by most insurers but some decide each case according to the applicant's medical history. Sometimes, policy conditions are imposed relating to the applicant 's or the applicant's family medical histories. Any extra conditions are disclosed before the policy comes in to force.

• The policy should lay out the specified illnesses in plain English that explains the details of cover in simple language.

What illnesses are covered?

All policies typically cover seven main illnesses:

• Cancer

• Coronary artery bypass

• Heart attack

• Kidney failure

• Major organ transplant

• Multiple sclerosis

• Stroke.

They also pay if a policyholder is permanently disabled by injury or illness.

Policyholders have to prove they meet the strict criteria for a payout laid down in their contract with the insurance company. For example, skin cancers and angina are not critical illnesses under critical illness cover.

Honesty is vital

It's vital that you are honest about your medical history when applying for critical illness cover more than any other insurance policy.

Falsifying the application, omitting key facts or failing to look after your health can all lead to an insurer voiding a claim leaving you with a useless policy on which you may have paid several years of expensive premiums.

Increasing cover

If you have a policy but want to increase the sum assured, that is the money the insurer pays out, then you should consider the options carefully and take advice.

Cancelling an existing policy may mean you lose benefits or receive less cash if you have developed any illnesses since taking out the policy. Some insurers may allow you to buy additional cover on your existing policy or you may have to take out a top-up policy in addition to the one you already have.

Points to consider

• Any quoted premium is an estimate until the insurer confirms the amount after reviewing your medical history.

• Ensure you understand the policy rules about paying out and what conditions meet the insurer's critical illness criteria

• Don't forget critical illness cover pays a single lump sum. If you need to cover income or your mortgage repayments while you are unable to work, other insurance may suit your requirements better.