Critical illness explained?
Critical illness cover could give you and your family financial help if you are diagnosed with a critical illness. Your income may well be essential for helping your family keep up with mortgage payments and other monthly obligations. Becoming critically ill could leave you unable to work and help support your family. This means that they may need additional support - which critical illness cover could provide.
How much financial support could it provide?
If you have an active critical illness policy, and you are diagnosed with an eligible critical illness, you and your family will receive a tax free lump sum from your insurer. You can use this money however you see fit - for example, you may want help with your mortgage payments, childcare or medical costs. The size of the payout is determined by a number of factors but as a rule, the larger you want the end sum to be, the more you will need to pay per month.
The size of your monthly premiums can also be influenced by your personal details. The cost of critical illness cover is commonly influenced by your age, gender, occupation and medical history. You may also have to pay higher premiums if you are a smoker or have a high BMI (body mass index). If your insurer thinks that you are more likely to make a claim, they may charge you more for your insurance.
What will be covered?
The range of illnesses covered varies depending on your policy. To be classed as a critical illness policy, it must at least cover cancer, stroke and heart attack. The Association of British Insurers (ABI) has also outlined around 23 conditions that they recommend insurers should cover. This list includes kidney failure, major organ transplant, Alzheimer's, multiple sclerosis, blindness and deafness. The more illnesses your policy covers, the more it could cost. You may wish to find a policy that covers a range of illnesses that could affect you. It may also be sensible, however, to avoid expensive policies if you don't think you are at risk from the majority of illnesses it covers.
Depending on the policy, your children could also be covered at no additional cost.
What won't be covered?
The majority of policies have detailed definitions of what is and is not covered. For example, although your policy will cover cancer, many insurers do not pay out for less advanced cases. Conditions such as stroke, heart attack and multiple sclerosis often need to cause permanent symptoms for the policy to pay out.
Other common exclusions include illnesses and conditions caused directly by:
- Drug or alcohol abuse.
- Illegal activity.
- Flying, unless you were a passenger in a commercially licensed aircraft.
- Extreme sports or hazardous pastimes, for example boxing or mountaineering.
- War related activities.
- Self inflicted injuries.
Image © iStockPhotos / Igor Dimovski
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Tags: insurance, life insurance, Critical illness cover, family, ABI, explanation