Critical Illness Plan Rules 2007

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  UK Critical Illness Plan Providers amend the rules in 2007 for Claims Payment             

UK Life Insurance Providers it seems have come in for some criticism in last few years, for sometimes refusing to pay out on critical illness insurance plan policies that insure against serious or critical illnesses and disability. But Critical Life Insurance providers state they are cleaning up their act in 2007 with an industry-wide drive to increase consumer understanding. Remember that Critical Illness Insurance Companies are in the business of providing cover & paying out claims and for the vast majority of cases they will do so.

  What are Critical Illness Plan's For ?

Critical illness plans or Serious illness [ sometimes known also as dread disease cover ] pays a tax-free lump sum if you become seriously ill or totally disabled, but only for the specified forms of illness that are set out on the plan document. Monthly premiums are based on your age, smoker status, weight plus both personal and family medical history, and you may have to undergo a medical before cover is issued.  This modern day serious illness cover product was originally invented by Marius Barnard {the brother of Dr Christian Barnard, the famous South African heart surgeon}.

Serious illness statistically according to NHS figures will afflict roughly 1 in 4 men and 1 in 5 women before they reach 65 - which is why the idea of covering yourself is an attractive one. But Critical illness Assurance policies that protect against the financial consequences of disability have hit the headlines for all the wrong reasons in recent years, with numerous cases of insurers refusing serious illness cover claims on technicalities and leaving sick customers without money in their hour of greatest need.

What do Critical Illness Health Insurance Plans usually cover ? 

Many Uk Critical Illness Providers do not cover every serious illness that can be described as critical, but many are now required to cover the "big 3" core conditions, which together make up more than 75% of most claims. CriticalIllness plan coverage - Most policies usually pay out on around 30 to 40 other conditions, including, aorta graft surgery, kidney failure, major organ transplant, multiple sclerosis and stroke as well as permanent total disability as a result of injury or illness. Some new plans into the marketplace eg; the Pru cover well over 100+ critical ilness conditions but these maybe severity based which means that instead of perhaps paying 100% of a claim they may pay 25%, 50% or 75% etc;

Critical Illness Insurance Comparison Tables

With increasing numbers of claims on critical illness policies being turned down either due to none-disclosure ie; where consumers have failed to put relevant factors such as existing medical conditions on application forms. Secondly, they may not fit the payout criteria by the Insurer so there is a big gap between what people think they are covered for and what they are actually insured against. Some providers like Norwich Union have helped the situation by advising that they have written to many customers to ask them if they may have forgotten to mention anything on their original application, that they may wish to now mention.

4/2007 - ABI introduces new codes to standardise definitions for Critical Illness

To help address the second of these issues, the Association of British Insurers (ABI), the trade body of the insurance industry, has introduced a code requiring providers to agree standard definitions of what is meant when they say they cover a particular condition. The code also requires important clauses in the insurance contract to be moved from the small print to the front of key facts documents.

"We have gone out of our way to involve organisations such as Macmillan Cancer Support and the British Society of Cardiology in creating these new definitions of what amounts to a critical illness to make them as clear to consumers as possible," says Nick Kirwan, chairman of the ABI's protection committee.

Helping Standardise the Small Print - 4/2007 onwards

Before the code came in, Critical Illness Providers would claim to cover cancer but may sometimes exclude various less serious forms of the disease in the small print. This practice left many consumers thinking they were covered on their critical illness life cover for types of cancer that they were not. Under the new code, which became obligatory for new policies sold from the end of April 2007, insurers will now have to spell out in the large print that less advanced cases, such as primary skin cancer, are not covered.

But Which?, the consumer body, says that you still need to go through serious illness policies with a finetooth comb to make sure you understand what you are buying. "Although this has gone some way to aiding understanding, we still found policies with tricky definitions and exclusions," says Dominic Lindley, policy adviser at Which? "It is vital that you read the policy summary or key facts document thoroughly and don't be afraid to ask questions if you don't understand anything. You should also consider whether income protection insurance, which pays an income, could be more appropriate for your needs than critical illness cover, which pays a lump sum."

The new code also forces providers to standardise what is and isn't covered under a particular condition. For example, some insurers could previously refuse claims on heart attacks where there was no chest pain - so-called "silent heart attacks" - but are not allowed to on new policies.

"Buyer Beware" Thinking of Cancelling Old Plans to Replace with New Cover ?

This new code may lead to a situation where some old critical illness plan policies have less cover than new ones. This could make you think it is perhaps worth surrendering for example an old critical illness mortgage insurance policy to get a new one with better cover. But many advisers say this maybe be the wrong decision.

" The new code does make it easier for people looking to buy new Critical Illness policies to compare rates & statsistics when shopping around." " However, If you bought a Critical Illness policy several years ago you and are thinking of changing to a newer style plan, you should seriously consider reviewing your plan benefits before considering a change. Your health or family health history may have changed since meaning new cover may be more expensive or have exclusions. It may have a guaranteed insurability option allowing you to increase your cover without further medical evidence anyway. The old plan may have guaranteed premium rates whereas a new plan maybe reviewable premiums. Also, because prices have gone up so much since then, you may not get the same terms if you tried to buy the same protection cover today. " In conclusion, "buyer beware". Ask your broker to check what you have before any decisions are made to replace your critical illnes plan

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