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What does Critical Illness protection actually cover?

What does Critical Illness protection actually cover?

Jul 16, 2020

If you want the peace of mind that financial support will be available to you if you’re diagnosed with a serious medical condition, Critical Illness cover is a great choice.

This type of protection provides you with a tax-free lump sum of money if you are diagnosed with one of a list of illnesses or disabilities.

Having a financial cushion in place can allow you to repay your mortgage, meet everyday expenses, or pay for medical care. It means you won’t have to worry about your finances at an already stressful time.

But what does Critical Illness insurance cover? Can you cover pre-existing medical conditions? And will an insurer pay your claim? Read on for answers to these questions and more.


What illnesses are covered under a Critical Illness policy?

A typical Critical Illness cover policy covers a specified list of illnesses and conditions. This varies from insurer to insurer, so it’s important that you compare policies carefully to make sure you know what illnesses each of them covers.

Rules state that Critical Illness policy documents must be written in easy-to-read plain English, so you can understand what you will be covered for.

This is not an exhaustive list, and the specific definitions will vary from insurer to insurers, but you can typically expect a policy to cover:

  • Aorta graft surgery that requires surgical replacement
  • Aplastic anaemia with permanent bone marrow failure
  • Bacterial meningitis that results in permanent symptoms
  • Permanent and irreversible blindness
  • Cancer, excluding some types and some less advanced cases
  • Cardiac arrest with insertion of a defibrillator
  • Coma with associated permanent symptoms
  • Creutzfeldt-Jakob disease (CJD) that results in permanent symptoms
  • Permanent and irreversible deafness
  • Dementia including Alzheimer’s disease that results in permanent symptoms
  • Heart attack of a certain specified severity
  • Heart valve replacement or repair that requires surgery
  • HIV infection from a blood transfusion, physical assault or accident at work
  • Kidney failure that requires permanent dialysis
  • Advanced liver failure
  • Permanent loss of hand or foot
  • Permanent and irreversible loss of speech
  • Major organ transplant from another donor
  • Motor neurone disease that results in permanent symptoms
  • Multiple sclerosis
  • Some open-heart surgeries
  • Total and irreversible paralysis of a limb
  • Parkinson’s disease that results in permanent symptoms
  • Removal of an eyeball as a result of injury or disease
  • Advanced respiratory failure
  • Stroke that results in in symptoms lasting at least 24 hours
  • Third degree burns covering a specified surface area of the body, face or head
  • Traumatic brain injury that results in permanent symptoms.

In 2018, insurer Royal London reported that the most common reasons for a Critical Illness claim were cancer (64%), heart attack (11%), stroke (8%), multiple sclerosis (4%) and children’s Critical Illness (4%).

The average age of a claimant (excluding children) was 50 years old.


How ill do I need to be?

As you will note from this list of conditions often covered under a Critical Illness policy, the ability to make a claim often depends on the severity of your illness or condition.

Advances in medicine and technology mean that traditional views of Critical Illnesses are constantly changing. For example, not all types of cancer are covered by this insurance and to make a claim for some illnesses you need to have permanent symptoms or be totally disabled.

Not also that this type of insurance doesn’t typically pay out if you die, unless you take it out as an ‘add-on’ to a life insurance policy.


Can I cover my child?

Many leading insurers also offer ‘children’s Critical Illness cover’ as a built-in feature of their policy.

If this cover is included, then the main policyholder can make a claim on behalf of the child if the child is diagnosed with a covered condition.

Some providers offer children’s Critical Illness cover as a percentage of the adult policyholders’ Critical Illness cover but cap the total lump sum at a fixed rate.

For example, if you had £300,000 of Critical Illness cover, and the child’s cover was 25% capped at £30,000, you would get a maximum payout of £30,000 for your child and not £75,000 (25% of your total cover).


Are existing medical conditions covered?

When you apply for Critical Illness cover, you will have to complete a proposal form and supply details of any medical conditions you have (or have had). This may include details of treatment, dates, severity, and the medication you had to take.

You must also provide details of your family’s medical history.

Insurers consider both your own and your family medical history to determine what cover they will offer. Some policies will cover existing medical conditions, but others will not.

If you already have a pre-existing medical condition, look for an insurer that will be prepared to cover it. You may pay an additional premium for the cover you need.


Should I get Critical Illness insurance?

Suffering from a serious illness or long-term condition can have a devastating financial impact. For example, you may have to give up work, and so you could lose your income at the same time as your expenditure might rise.

Check whether you have existing cover in place, and what pay you would receive from your employer if you were off work for an extended period. If you’d be left short of money if you were unable to work, or you have dependents or a mortgage to pay, Critical Illness cover could provide you with a lump sum at a time where you really need it.

If you have no financial commitments or dependents, Critical Illness cover may not be for you.


Will an insurer pay my Critical Illness cover claim?

One of the common objections to taking out Critical Illness cover is ‘insurers look for ways of getting out of paying claims’.

Indeed, a survey by Britain’s biggest insurer, Aviva, has revealed that just 47% people believe a life insurance or Critical Illness policy will pay out when a claim is made.

However, it should be noted that figures from the Association of British Insurers (ABI) show that providers have an exceptional record when it comes to paying Critical Illness claims.

Overall, more than 91% of Critical Illness claims were paid in 2019. Here are some specific figures from the UK’s leading insurers.

  • Royal London – in 2018 they paid 91.2% of Critical Illness claims with an average payout of almost £99,000
  • Aegon – in 2019 Aegon paid 94% of Critical Illness claims
  • Legal & General – in 2019, Legal & General paid 92% of Critical Illness claims. A total of £224 million was paid out, with an average claim of £66,857
  • Aviva – in 2019, Aviva paid 93.1% of all Critical Illness claims. This represented 4,957 claims totalling £353 million
  • AIG – AIG Life paid 94% of Critical Illness claims in 2018, up from 93% the year before
  • Vitality – in 2018, Vitality paid 91.2% of Serious Illness Cover claims, totalling almost £20.4 million.


Getting the Critical Illness cover you need

Critical Illness cover can provide you with a tax-free lump sum at a time when you need it the most. If you’re diagnosed with a serious illness it can help you:

  • Repay some or all of your mortgage to give you and your family financial security
  • Help you to meet your regular monthly commitments
  • Pay for specialist medical care

We can help you to compare Critical Illness cover quotes and to find the right cover for you. As an independent broker, we have access to the whole of market to find you the best deal possible.


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