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What is Critical Illness Insurance for?
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by: Russell O Sullivan
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Whatever form of Life Insurance you choose, you will invariably also be given a choice of a number of optional add-ons, including insurance against critical illness. If you elect to take out this cover, then in the event of your being diagnosed with a serious or critical illness during the term of the insurance, you will be paid a lump sum or, occasionally, a regular income, for a pre-determined period. Critical illness insurance can also be bought as a stand-alone insurance.
Different policies will cover different critical illnesses, so it is important to study the schedule of illnesses covered before you commit to a particular insurance policy. Illnesses commonly covered include cancer, heart attacks, strokes, major organ transplant and Alzheimer’s disease (this is a guide only and no substitute for a careful study of what any one critical illness insurance covers).
How much cover?
When deciding upon the level of security you need against such an unfortunate event, it’s necessary to try to gauge the extent of your loss of earnings and just how much you will need to replace what the illness will prevent you from earning. For example, would a physical handicap require more or less extensive alterations to your home? Could you still use the stairs? How much would any necessary alterations cost? Clearly, enough of an insurance pay-out to cover any outstanding mortgage would be an enormous relief. Although there are no hard and fast rules on the level of such cover, it is often thought that an amount equivalent to 3 or 4 times your annual salary should be aimed for.
Naturally, the level of security and the amount of compensation offered by the critical illness insurance will depend on the monthly (or annual) insurance premiums you can afford. The level of premiums will also be determined by your state of health when the insurance proposal is made, as well as other lifestyle factors, such as whether or not you are a smoker. Any illness from which you are already suffering or which you have had since a child may be excluded, as will illnesses or conditions which are medically known to run in your family.
These are not the only exclusions, of course, and there will be other illnesses and conditions excluded as a result, for example, of things like flying, criminal activity, your disregard for specific medical advice, dangerous sports or recreational activities, civil disturbance or war. As with all insurance policies, it is important that you read and understand all of these types of exclusion to satisfy yourself that the policy covers the risks you intend to insure.
Waiver of premiums insurance
A related, additional option which you may wish to consider when thinking about critical illness insurance is something called waiver of premiums insurance. This will extend additional protection to your life assurance policy by ensuring that its premiums continue to be paid if you are unable to continue your normal employment because of illness or injury.
Though you’ll have made every effort to fully understand all the terms and conditions of any critical illness insurance at the time of the proposal, all these policies (as, indeed, with all life assurance policies) there is a “cooling off” period of at least 14 days. During the “cooling off” period you are at liberty simply to tell the insurer that you do not want the policy and will be repaid any initial premiums you have already paid.
Critical illness insurance can play an important part in your armory of family protection. Make sure that:
• The illnesses you want to be covered are covered by the policy
• Know and understand whatever exclusions are included in the policy
• Give thought not only to how much you and your family are likely to need in the event of your being diagnosed with a critical illness but also how much you can afford to pay in regular premium payments
• Consider waiver of premiums protection
• Make use of your "cooling off period" if necessary.
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To find out more about Critical Illness go and have a look at http://www.confused.com/life-insurance
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