Critical Illness Insurance (Dread Disease Insurance)

Insurances

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Critical Illness

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Critical Illness Insurance or Dread Disease Insurance


Critical Illness Insurance, sometimes called Dread Disease Insurance, will pay out a lump sum if the policyholder is diagnosed with a serious medical condition.

Critical Illness Insurance Options


More than sixty insurance providers offer critical illness insurance cover and life insurance quotes, so policies vary considerably as to what exactly they offer.

Policies that follow Association of British Insurers (ABI) guidelines cover a minimum of seven core conditions:

• cancer;
• heart attack;
• heart bypass surgery;
• stroke,
• kidney failure;
• major organ transplant;
• multiple sclerosis.

Some policies cover a wider range of often rare medical conditions with premiums that are appreciably higher than for more straightforward policies. Potential policyholders are advised to study policy details carefully and choose a policy that covers the major risks at a reasonable price, unless their personal circumstances suggest that cover for some additional rarer conditions would be appropriate.

Critical Illness Insurance Exclusions


When taking out critical illness insurance it is essential that the policyholder is aware of any exclusions that the insurer might specify. Conditions that are commonly excluded may include:

• AIDS and HIV;
• lymphoma;
• non-invasive skin cancers;
• early stage prostate symptoms;
• drug abuse;
• self-inflicted injuries.

In addition, some heart conditions such as angina may be excluded from certain critical illness cover policies.
As always, when dealing with insurance providers, it pays to read and understand the small print before selecting the most suitable critical illness policy option.

Who Should Choose Critical Illness Insurance Cover?


The type of insurance cover required by individuals very much depends on their personal circumstances. For example, taking out critical illness insurance to pay off a mortgage makes more sense than buying life insurance for a single person without dependants. However, for a person with a family, a combination of payment protection insurance, private medical insurance and life insurance could be more appropriate.

Making a Critical Illness Insurance Claim


Most critical illness policies offer a one-off tax-free lump sum rather than payment by monthly instalments. Depending on the nature of the policy, the maximum possible payout from a critical illness claim could vary from £100,000 up to £250,000. Once the nature of the medical condition has been confirmed to the satisfaction of the insurance provider, payment should be made to the policyholder within 28 days. However, settlement of the claim may take longer if assessment of the degree of disability suffered by the policyholder is required in order to decide the value of the payout.

Further Information about Critical Illness Insurance


The Association of British Insurers’ website (www.abi.org.uk) provides general information about critical illness insurance (including a statement of best practice).

The ABI website also gives details of other forms of health and protection insurance that are available to consumers.

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