What Is Critical Illness Cover?

Critical Illness Cover is an insurance policy that provides you with a tax-free lump sum payment if you are diagnosed with a critical illnesses. This can include conditions like heart attacks, strokes, and various types of cancer. It can be bought as a standalone policy or as an add on to a life insurance policy.

Why is Critical Illness Cover Important?

Being diagnosed with a critical illness can mean a significant loss of income due to the inability to work. The lump-sum payment can help cover your daily living expenses, medical costs, and even mortgage payments.

With advances in medical science, more people are surviving critical illnesses but often require extended periods of recovery. Critical Illness Cover can help you maintain your lifestyle while you focus on getting better.

If you have a family or dependents, the financial implications of a critical illness can be devastating. Critical Illness Cover provides a financial safety net that can protect your loved ones during this challenging time.

What types of Critical Illness Cover are there?

Standard Cover: This covers the most common critical illnesses but may not include less common conditions.

Comprehensive Cover: Offers wider coverage, including less common conditions, but comes at a higher premium.

Additional Cover: This is an add-on to life insurance, providing critical illness coverage but reducing the life insurance payout by the amount used.

What conditions are covered by critical illness polices?

The conditions covered will vary from policy to policy so you should check the details of a policy before buying it. The most commonly covered conditions usually include severe types of cancer, heart attacks, strokes, and surgeries like coronary artery bypass. But policies can cover a wide range of illnesses.

What isn’t covered by critical illness insurance?

Common exclusions include pre-existing conditions, less severe forms of cancer, self-inflicted injuries, conditions arising from substance abuse, and sexually transmitted diseases.

You will not be covered if you stop paying your premiums or if you develop and illness that’s not listed in your policy.  

What affects the price of Critical Illness cover Premiums?

Premiums can vary depending on factors like age, health, and level of coverage.

• Age: Older individuals will generally have higher premiums.
• Health Status: Pre-existing conditions or a family history of illnesses can increase the premium.
• Lifestyle Choices: Factors like smoking and alcohol consumption will affect your rates.
• Occupation: Riskier jobs may entail higher premiums.
• Level of Cover: Comprehensive policies are more expensive than standard ones.
• Term Length: Longer policy terms will generally be more expensive.

What should I bear in mind when choosing a critical illness policy?

There are a number of key points to consider when exploring critical illness cover

• Total and Permanent Disability: Some policies include coverage for Total and Permanent Disability. This is often an add-on and not a standard feature, so check if it’s included if you think you might need it.
• Policy Exclusions: Always read the fine print. Some policies may not cover specific scenarios like overseas treatment or conditions arising from dangerous activities. Make sure you understand what conditions are not covered
• Claim Limits Be aware that there might be limits on how much you can claim, either annually or over the lifetime of the policy.
• Survival Period: Some policies require you to survive a minimum number of days after diagnosis to make a claim.
• The waiting period. Some policies have a waiting period during which you cannot make a claim. Make sure you’re aware of how long this is, as it could affect your financial planning.
• Policy Flexibility: some insurers offer policies where you can add or remove conditions, allowing you to tailor the coverage more closely to your needs, although this could affect premiums.
• Partial Payouts: Some policies offer partial payouts for less severe conditions or early-stage diagnoses
• Renewable vs. Non-renewable PoliciesSome critical illness policies are renewable, giving you the option to extend coverage after the term expires without undergoing a new health assessment. Non-renewable policies will end after the term, and you’ll have to reapply and undergo medical assessment again.
• Cancellation and Cooling-off Period: Look for Information on what happens if you change your mind shortly after purchasing.

How does critical illness cover differ from life Insurance?

Life insurance pays out a sum to your beneficiaries upon your death. Critical Illness Cover, however, is designed to provide you with financial support while you are still alive. While both insurance products offer financial protection, they serve different needs and can complement each other well.

For instance, if you have a life insurance policy with a term that matches your mortgage and you’re diagnosed with a critical illness, you may find it challenging to maintain mortgage payments. This is where Critical Illness Cover can step in, offering you a lump sum to meet these commitments.

In essence, while life insurance provides for your family after your demise, Critical Illness Cover supports your financial needs when you’re unable to earn an income due to severe health conditions.

Conclusion

Life insurance covers the worst-case scenario of death, Critical Illness Cover is designed to provide financial assistance when life throws an unexpected and severe health challenge your way.

Consider both to give yourself and your loved ones a comprehensive financial safety net. For added protection you could also take out income protection insurance, which covers you in the event of you are unable to do your job due to illness or injury.

Remember, always consult an Independent financial advisor to ensure that you’re making the best choice for your individual circumstances.