About... Critical Illness Cover

Let’s face it, unless you have dependants, or your mortgage company demands it, life assurance offers you - yes, YOU - no real personal benefits other than piece of mind.

After all, most of us take out life assurance to provide for our families if the worst does happen, or to cover a mortgage or other substantial loans. There are, though, plenty of medical conditions and illnesses that, although not immediately fatal, have a serious impact on both our lifestyles and, crucially, our ability to earn a living.

And that's where critical illness cover comes in.

How it works
Heart disease, strokes and cancer are the most common causes of death in the UK*, but advances in medical science mean that more people survive these serious illnesses every year. While Critical Illness cover will not pay out on most early stage forms of cancer and 'mild' heart attacks, the financial cushion provided by the proceeds of a policy can be vital during a period of recovery from the types of cancer and heart attack that are covered.

* Source -  British Heart Foundation June 2004.

Conditions that were once almost always fatal can now be treated - if not actually cured - and the victim might well live on for decades afterwards.

This is one reason more people are looking at critical illness cover, either alongside or as an alternative to a life assurance policy.

Critical illness cover pays out a lump sum  if you are diagnosed as having one of a number of illnesses, including some forms of cancer, strokes and heart disease. And the policy will pay out even if you subsequently make a full recovery.

Why not use our Life and Critical Illness Calculator  to work out how much cover you require, or get your Life & Critical Illness Quotations instantly and online.

Why choose CIC?

Statistics show how common critical illnesses are. One in three people will suffer from cancer at some point in their lives, with a third of those succumbing to the disease before the age of 65*.

*Source - Cancer Research UK 12/01/2005

According to Macmillan Cancer Support, research shows one in seventeen people lose their home after being diagnosed with cancer and one in six  have difficulties in keeping up with their mortgage or rental payments. Source  www.macmillan.org.uk 5/01/2007

The most common forms of cancer that are excluded from most Critical Illness policies include most 'early stage' cancers that can be easily treated, and non malignant melanoma skin cancers that may be 'in situ' and not spreading. 

There are, however, a number of other conditions that are covered by Critical Illness plans, and cancer is only one of them. Clearly, if you do fall seriously ill with any of the named conditions (including those cancers that are covered), there is a lot to be said for a financial cushion.

A policy could help someone with a critical illness pay off the mortgage or other loans, compensate for a loss of income from work, or pay for children to finish their education.

Alternatively, it could pay for modifications to the house and car to make them suitable for someone with a disability.

The point about the cash resulting from a CIC policy is that you can use it for whatever you wish. This is unlike, for instance, mortgage payment protection insurance (MPP), where the policy is sometimes paid direct to your mortgage lender.

CIC with life assurance
Many critical illness policies are sold as an 'add-on' to life assurance policies. In practice, this means a policyholder receives his or her life assurance payment once a critical illness is diagnosed, rather than on death.

If the policyholder makes a full recovery, the payment is still theirs to keep. If they subsequently die, however, there is no additional life assurance payment. If they die suddenly - or within the 'survival period' - the life policy pays out in the normal way.

Standalone policies

A standalone critical illness policy will cover the same range of sicknesses as the critical illness part of a combined policy.

The difference is that someone who suffers a critical illness can make a claim, but any life assurance is unaffected. Should they eventually succumb to the illness, their family will receive a further lump sum.

The disadvantage is that running two policies side by side is more expensive. Also, there will be no payment from the critical illness policy if the holder dies suddenly, for example, in an accident.

CIC - an overview

Beyond these basics, when it comes to choosing critical illness cover, it’s important to compare like with like. There are industry standards for critical illness policies, but these cover the basics.

Insurance companies are free to go beyond the standard, and while this increases choice, it can make matters confusing for consumers.

What it covers

The basic, or 'core', conditions covered by critical illness policies are:

These are covered whether or not the patient makes a full recovery. With some conditions, especially cancers that are diagnosed early enough, recovery prospects are now far better than even 10 years ago. In addition, the Association of British Insurers sets standard definitions for a further 13 conditions, as well as for permanent disability. Full details are available from the ABI's web site: www.abi.org.uk. Some insurers offer additional benefits for conditions including blindness and deafness, loss of speech, loss of limbs, or falling victim to Alzheimer's or pre-senile dementia before the age of 65.

Your About Mortgages adviser will be able to take you through the conditions covered by various companies

Once you have decided to protect yourself against Critical Illness, your next step is working out how much cover you need.

Why not use our Life and Critical Illness Calculator  to work out how much cover you require, or click here for Life & Critical Illness Quotations.

Please remember that the amount of life and critical illness cover you need should be reviewed regularly and as your financial circumstances change. If you are unsure of the amount of cover or  type of policy you require you should complete an advice request to arrange a no obligation review of your needs.