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Critical Illness Cover

In case of a severe illness, or moreover on a life threatening situation, having a monthly payment or capital to repay would put any individual in a very difficult financial situation. A Critical Illness policy is very useful, as it would provide you with an instant financial cushion by means of a lump sum, following the diagnosis of critical disease. Such a lump sum could be used to clear outstanding mortgages, tax bills and other debts or make changes to accommodation.
Critical Illness insurance will pay you a tax free lump sum on diagnosis of any one of a wide range of critical illnesses including cancer, heart attack, stroke, brain tumour and many more. Many years ago, such illnesses were more often than not death sentences, but due to advances in medical technology, many people now survive such illnesses. However, such illnesses may leave you unable to work again, so how would you survive financially ? Traditional Life Insurance pays out on death, not if you survive but are physically or mentally impaired. This is where a critical illness policy comes into play. The costs of providing private nursing care, or making structural adjustments to your home can be covered.
  • 40% of people with cancer will live for at least five years
  • 75% of men under 45 who have a heart attack will survive for at least three years
  • Every year, nearly 1.5 million people have major operations.
Criticall illness cover is offered as a basic or comprehensive policy. The basic plan will cover the main conditions and generally a comprehensive plan will cover a wider scope of conditions (these may include blindness, total and permanent disability, loss of hearing etc). Below is a reference of conditions that are generally always covered, those which are considered 'additional' cover for comprehensive policies, and conditions that may or may not be offered by certain insurance companies.
The ABI (Association of British Insurers) defines 'Core' benefits as:
  • Cancer
  • Coronary Artery Bypass
  • Heart Attack
  • Major Organ Transplant
  • Kidney Failure
  • Multiple Sclerosis
  • Stroke
'Additonal Benefits' are currently:
  • Aorta Graft Surgery
  • Benign Brain Tumour
  • Blindness
  • Coma
  • Deafness
  • Heart Valve Replacement
  • Loss of Limb
  • Loss of Speech
  • Motor Neurone Disease
  • Paralysis/Paraplegia
  • Parkinson's Disease
  • Terminal Illness
  • Third Degree Burns
Benefits which are offered by some insurance companies are:
  • Aids via Assault
  • Aids via Blood Transfusion
  • Aids via Occupation
  • Alzheimer's Disease
  • Angioplasty
  • Aplastic Anaemia
  • Bacterial Meningitis
  • Cardiomyopathy
  • Children's Benefit
  • CJD
  • Diabetes
  • Hodgkins Disease
  • Liver Failure
  • Loss of Independence
  • Major Head Trauma
  • Major Medical Expenses
  • Open Heart Surgery
  • Pre-senile Dememtia
  • Progressive Supra-nuclear palsy
  • Rheumatoid Arthritis
  • Severe Lung Disease
Please note that these definitions do change over time, in line with developments in medicine and treatment of disease. Conditions that may be defined as 'critical' today, may be entirely treatable in twenty years time.
It is also worth-while checking out what is NOT covered - for instance, certain types of cancer (for instance Prostate Cancer) or AIDS may be excluded in the policy. Therefore, whilst it is always better to find a plan that has the most definitions, it may not be so great if there an excessive number of excluded illnesses, or situations where it will not pay out (i.e. clauses regarding attempted suicide, terrorist attacks, war, etc).
It is possible to take out plans that combine life assurance with critical illness that pay out on the first occurence (or even on both events) in order to get a higher level of protection.
NOTE: This document is intended to provide a brief overview of the subject. It should not be read as a recommendation to use any particular product, as it does not take into account individual circumstances and attitudes.

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