| Critical illness insurance pays out a lump sum if you are diagnosed as having a range of serious or life-threatening conditions. These include cancer; heart attack; kidney failure; stroke and multiple sclerosis. Some insurers offer up to a total of 30 conditions including permanent and total disability, coronary artery by-pass grafts, Alzheimer’s and Parkinson’s diseases. |
Do I need it? Once, diagnosis of a critical illness was virtually a death sentence. Now many previously untreatable conditions are treatable. Overall, you are now more likely to live than to die if you have a critical illness. A cash lump sum can’t make you better but it can avoid you having to worry about money at a time when all your energy should be concentrated on getting better. |
| Buying critical illness insurance When buying critical illness insurance there are three things to decide: |
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How much cover you have is often determined by what you can afford, as critical illness insurance costs more for each pound of sum assured than life assurance (because you are about 2.5 times more likely to have a critical illness than to die before age 65). Most people want to at least be able to pay off their mortgage and any other loans, then add on what you can afford. In terms of conditions covered the choice is to have basic cover (about five or six conditions) or comprehensive - the full number that that insurer offers. You will pay a bit more for comprehensive but even basic cover should cover at least 80 per cent of likely critical illnesses. The policy should last at least as long as your mortgage does but could last for the whole of your life. |
| Making a claim |
To claim you will need to prove that you meet the criteria laid down in the policy conditions. Usually this involves contacting the insurer first and completing a claim form. They will obtain the necessary medical evidence, usually from your specialist. If you have a standalone plan, you may have to prove that you are still alive 14-30 days after being diagnosed. If you die after that and before the claim is paid, your estate would get the benefit. |
