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Citical Illness Insurance UK

Critical Illness Insurance
 
One of the things that keeps many people awake at night - particularly if they are the main bread winners in the family - is the prospect of becoming too ill to work. What do you do if you cannot hold down a job because of ill health? You force your employer to cough up is one answer. But all too often what happens is that the employer makes lots of warm noises, pays you for a period of time and then quietly dumps you while hiding behind a wall of legal technicalities. Critical Illness insurance is one other answer.
 
What exactly is critical illness insurance?
 
A critical illness insurance policy pays the policy holder a cash sum in circumstances where he or she is too ill to work. Usually the sum is paid out in one go and is tax free. Critical illness insurance pays out if you suffer from a pre agreed list of medical conditions (see below for more) and should not be confused with private health insurance or income protection insurance both of which are covered separately on this site.  
 
What conditions are covered by a critical illness policy?

Until recently the definition of what constituted a critical illness varied hugely from one policy to another. In 2005 the Association of British Insurers took it upon themselves to try and standardise what were and were not critical illnesses from the point of view of insurance and their work has been of considerable benefit to the consumer. Insurance companies still have some 'wiggle room' (for instance in agreeing precisely what classifies as a cancer and what does not). However, broadly you will qualify for compensation under a critical illness policy if you suffer from one of the following conditions:
 
- cancer
- heart attack
- stroke
- kidney failure
- coronary artery by pass surgery
- major organ transplant
- multiple sclerosis
- blindness
- coma
- loss of limb
- third degree burns
- deafness
- blindness
- benign brain tumour
- loss of speech
- Parkinson's disease
- terminal illness
- aorta graft surgery
- motor neurone disease
- heart valve replacement or repair
- paralysis/ paraplegia

If you need a more precise definition of any of these conditions consult the Association of British Insurer's website at www.abi.org.uk
 
What conditions are excluded from the definition of critical illness?
 
As with all other forms of insurance critical illness insurance policies contain exclusions (ie circumstances in which the insurance company is not obliged to pay out).The Association of British Insurers have also tried to standardise these exclusions and generally you will find the following excluded from a critical illness policy:
 
Injury or illness caused by:
 
- aviation
- drug abuse
- failure to follow medical advice
- criminal acts
- self inflicted injury
- war or civil commotion
- hazardous sports

HIV/ AIDs is also usually excluded as is - rather curiously - living abroad.
 
Can anyone take out a critical illness policy?

Very often people only decide to consider taking out critical illness insurance when they become - or think they are about to become - very ill. Regrettably insurance companies are very aware of this and if you already have one of the conditions mentioned above you will probably find it very difficult indeed to obtain critical illness insurance - at least in relation to that particular condition. It is also the case that some insurance providers will refuse you critical illness insurance if there is a history of certain medical conditions in your family. Alternatively they may only offer to cover you for a significantly increased cost. In addition you will probably find it difficult to get yourself insured if you are over the age of 60. 
 
Critical illness cover linked to life insurance
 
One option you may wish to consider is attaching critical illness cover to a life insurance policy. If you already have life insurance cover or are contemplating taking out life insurance in conjunction with a critical illness policy make sure you understand how the two fit together.