Critical Illness Insurance

With the average life expectancy increasing combined with great advances in the way serious illness are treated, more and more of us can expect to survive the effects of a devastating critical illness.

Critical illness insurance is a category of term life cover also referred to as critical illness cover or dread disease cover. It provides the policy holder with protection against the onset of one of a pre-determined list of critical conditions such as heart attack, stroke or cancer. The policy pays out a tax free lump sum if the policyholder survives a set time after diagnosis of the condition, this is generally anywhere between 14 and 21 days depending on the insurer. This payout can be used to make major changes to your lifestyle should you need to. For example, making alterations to your home and transport arrangements following the effects of your illness. Critical illness insurance was introduced initially as 'dread disease' cover back in the 1970's but was soon re-branded as critical illness insurance by the industry. Pricing for critical illness insurance is considerably more expensive than life insurance per £1000 of sum assured, this is simply because the insurer is statistically more likely to have to pay a claim.

Critical illness insurance is commonly bought in addition to life insurance when taking out a new mortgage or business loan. This type of combined policy provides peace of mind and protection for the policy holder's dependents should they either die or become seriously ill. Critical illness insurance contracts can vary greatly in terms of the level of cover offered depending on which company you apply for cover with.

The (ABI) Association of British Insurers has attempted to standardise the number and type of critical conditions covered to enable the consumer to more easily compare critical illness insurance products from one provider to the other. Proceeds from a claim on your critical illness insurance can also be used to pay for expensive medical treatment when you are most in need. Bupa for example offer a feature called 'Best Doctors' which gives the policyholder access to specialist treatments and world renowned doctors should you need it.

Critical illness insurance can also be purchased in conjunction with a feature known as (TPD) Total and Permanent Disability. This additional benefit provides the same level of financial protection as offered by the critical illness insurance, but provides cover in the event of you suffering a serious accident where you become unable to perform your own occupation.