Critical Illness Cover
As the title suggests, critical illness cover is an insurance policy that provides the holder with a financial pay out to cover a range of costs relating to their management of a critical illness. Policies pay a lump sum if the customer develops a critical illness during the term of the coverage to cover the cost of treatment, medication or the need for surgery. Depending on the specifics of a policy, other related costs, such as the need for home adaptations, specialist care or even day to day expenses can be covered. Critical illness cover can also provide money to cover the loss of income due to a serious illness. And, for the worst case scenario, policies can cover terminal illnesses.
Critical illness cover providers stipulate which illnesses and debilitating medical issues are covered by their policies. Coverage is not uniform and different providers offer different levels and ranges of cover. With this in mind, it is essential that customers gain a clear understanding of the nature of coverage each provider offers.
In their literature, critical illness insurance companies will provide a list of the illnesses and ailments covered by their critical illness insurance schemes. Policies are also likely to have age limits which customers must fall within to qualify for coverage. As children are exposed to a range of illnesses that adults are unlikely to suffer from, specialist critical illness coverage is offered for the under 18's. Typically, adults up to around the age of 60 are eligible for mainstream critical illness insurance products. Those in their pension years are likely to need specialist coverage. Critical illness cover policies also often have cut-off ages. At a set point (often around the age of 70) coverage ends. At this time the policyholder will have to seek the kinds of specialist coverage mentioned above.
When taking out critical illness cover, customers will be required to either take a medical or answer a medical questionnaire. As policies will not cover existing illnesses, this process is used to both establish the status quo at the commencement of the policy and the level of risk the critical illness coverage provider is undertaking.
The cost of critical illness cover can vary greatly because of the flexibility the current market offers. Coverage can start from under £10 per month depending on the level of financial cover taken and the term of the policy. Some critical illness insurance providers also offer non-critical add-ons to policies for an extra premium. Such additions can include fracture cover and permanent disability cover. Reinstatement cover is also offered. This allows customers to take out new critical illness cover after a claim. Some provides also offer free extras, such as child cover when a parent takes out a policy.
In a similar vein to life insurance, critical illness cover policies offer the options of set premiums for the life of the coverage or variable premiums, which the provider can change at designated times. As with other similar insurance, the advantage of the set price option is the reassurance of a guaranteed monthly (or annual) cost, while the variable plan offers potentially cheaper premiums, but with the risk of inflation.
Finally, a more recent development of the critical illness insurance industry is the bundling of cover with life insurance plans. Most providers now offer life insurance policies with critical illness cover included. Such policies can provide customers with an easier to manage cheaper option. However, care must be taken to review the level of critical illness cover offered, as it can be less than a stand-alone dedicated policy.