Critical Illness Protection Life Insurance ~ Key Features
- Designed to pay out on diagnosis, claim & survival of specified Critical serious illnesses
- Common Critical Illness Life Assurance Policies include some forms of cover of the main 4: cancer, heart disease, MS & stroke.
- Plans terms vary & may cover between 25-150 different types of illness benefits
- Can be in sole or joint names
- Critical Illness benefits are currently paid out tax free on claim
- Designed to pay out as a lump sum or income upon diagnosis of dread disease
- Medical evidence may be required & a medical examination for those with health issues
- Premiums may be guaranteed or reviewable
- Waiver of Premium (where the Insurer waives/protects & covers your premiums after a deferred period of 4/8/13/26 weeks due to sickness or accident)
- To help avoid Inheritance Tax issues on death (if combined with Life Insurance) policy should be considered placing into a split trust to retain benefits on claim
Each Critical Illness policy is designed for covering particular illnesses & some Insurers plans more than others; you may wish to carefully examine the policy wording before committing to one policy or indeed consider replacing a policy or just seek professional advice. Cover is also known as dread disease insurance cover or serious illness cover.
Critical Illness Insurance Comparison Tables
Note that some multi-plan policies have a Critical Illness Life Assurance Cover option which you can add onto the plan.
Mortgage or Family 'Critical Illness Protection Cover'
Critical Illness Life Insurance Cover as mentioned will pay out a lump sum upon diagnosis of a specified serious illness. You decide the number of years the policy will be in force and the level of cover you require at the outset.
The critical illness policy can be set up on a single or joint life basis or can be added to either Level Term or Mortgage Life insurance.
If a specified critical illness is diagnosed during the term of your policy eg; cancer & agreed by the insurer, then the cover is paid out. If you have not suffered any serious illness at the end of the term then the critical illness insurance policy ceases and nothing is paid out as this product [ if it is a term plan ] with no cash in value at any time.
If you are intending on replacing an existing critical illness life insurance policy, it is strongly recommended you talk to an adviser first as you cannot necessarily determine wether one plan is better than another, for example, by one just having more illness definitions than another. Note: do not cancel any current arrangements until any new policy is in force.
How much do Critical Illness Life Assurance Cover do I need ?
When thinking about Critical Illness Life Insurance Cover, you should try to estimate what your loss of income will be and what money you may need to compensate for the loss of earning power.
How much it would cost to make alterations to your home to accommodate you, should you be unable for example to use your stairs, may surprise you. Sufficient benefit to pay off the balance of your mortgage would provide enormous peace of mind should you become unable to earn short or long term and therefore continue to make mortgage repayments.
What does Reviewable & Guaranteed Quotes mean ?
You may have seen terms reviewable & guaranteed on critical illness insurance quotes with a wide difference in prices. Usually the cheaper option "reviewable" means a possible premium increase annually or after say first 5 years - when it may then increase at each insurers review. This may in time however work out far more expensive than guaranteed cover - due to the premiums costs increasing at each review. Guaranteed means it is not reviewable, so stay the same throughout.
Critical Illness Life Assurance Cover payments are usually either monthly or annually and the premium which you can afford will dictate the level of benefit you will receive should you succumb to a covered illness such as heart attack.
Often it is strangely cheaper to also include & underwrite Life Insurance with your Critical Illness Life Plan rather than have just stand alone Critical Illness insurance. Indeed some insurers only charge reviewable premiums for this stand alone cover rather than guaranteed premiums. Therefore if you want the guaranteed premium option, you may wish to consider your choices.
Underwriting & Health Issues
Premiums are also influenced by your health & smoker status at the time of taking out the policy, as well as factors such as whether you height & weight is in proportion.
You maybe unlikely to be able to get cover for any recent serious illness & you will find premiums are higher if you do have a history of particular illnesses in your family.
There are always exclusions on Critical Illness Life Insurance Cover plans however and it is likely that if you have previous medical conditions you may not be entitled to full coverage. This means you must disclose all relevant facts.
Why not just take out PHI Insurance instead of Critical Illness Cover ?
Critical Illness is a possible cheaper and simpler alternative to income protection, as there are lots of common situations when it would not pay out - for example, if you had back problems or a stress-related illness. Additionally, not all occurrences of the critical illnesses listed are covered, for example some early stages of cancer are not covered. Ideally you should have both plans if your budget allows this. For more information on this & costs talk to a professional broker here.
Read the policy carefully ~ Are the Critical Illness Terms acceptable to you?