Critical Illness Insurance
Most policies will pay out following heart disease, a stroke, renal failure, cancer, paralysis, or a major organ transplant and coronary artery bypass surgery.
How does critical illness insurance work?
The money is usually paid out in a lump sum and is tax-free, and maximum benefit varies from about £100,000 to £250,000.
It is usually paid out within 28 days of diagnosis. Single people need critical illness insurance to prevent them becoming dependent on friends and family.
Dual-income couples need it to prevent them suffering a financial blow should one partner have to stop work. But cover is not cheap, so it pays to shop around.
You can only claim once on a critical illness insurance policy.
- Do not buy a critical illness insurance policy purely on the basis of cost.
- Ensure that the insurance company supplying your policy is financially secure.
- Check that permanent disability cover is covered by your policy.
- Check that the insurance company is a number of an ombudsman scheme.
Ten things to consider before buying critical illness insurance cover:
- Premium How competitive is the price you are paying?
- Employee benefits Find out whether your employer offers critical illness insurance as a benefit.
- Guaranteed rates Your premiums might seem cheap today but will they stay that way?
- Life cover Most critical illness insurance policies include life cover free of charge. Does yours?
- Number of conditions covered Make sure you read exactly what you are covered for. Some policies cover just a few conditions, some cover nearly 40. But how many are you covered for? And does your insurer hold the right to change them or are they fixed?
- Children’s cover Now one of the highest areas of claims, but not all policies automatically cover your children. Does yours?
- Occupation class Are you insured if you cannot do you own job or if you cannot do somebody else’s?
- Amount of cover Do you have enough cover? Do you have too much?
- Length of term Are you covered for long enough? What will you do when your cover runs out?
- Trusts Critical Illness Cover often comes with life cover included. If the policy is not written in a trust 40% of the pay out could go to the tax man. Is your policy in trust?