Critical Illness Cover Anticipates the Doctor's Diagnosis

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It's a scene that most of us are likely to dread; a visit to the doctor's surgery where we're given the diagnosis of an illness. The world may well feel as though its been stood on its head, but as the dust begins to settle, our thoughts turn to practical matters such as whether we are able to continue in work, for how long and where on earth the support might come from if the working hours are reduced or cease altogether. Is the home in need of adaptation to suit our medical condition and is additional care or nursing support likely to be needed? Etc. CI cover might help to address these and other questions.

What is a critical illness?

The term might be used quite regularly by your doctor, nurses, members of the family, and others, but what medical conditions are defined as a "critical illness"? In an insurance contract, of course, there needs to be a very specific definition since the diagnosis of such is the sole criterion for the policy paying out.

Whilst it is true that any insurance offering critical illness cover does indeed closely define the qualifying conditions, the fact is that different policies are likely to adopt different definitions. The list of critical - major or debilitating illnesses for which there is unlikely to be a lasting remedy - might range quite widely from one insurer to another. When considering critical illness cover, therefore, it is important to understand just which illnesses any particular policy embraces.

How much cover?

The amount of benefit you are likely to need following the diagnosis of a critical illness depends, of course, on the nature of that illness (and, therefore, your physical capacity), your needs and your circumstances. In short, therefore, it is difficult to be precise in any such calculation. Since the size of any serious illness insurance payout is determined by the amount you are prepared - or able - to pay in monthly premiums, however, the choice is often determined by what you can afford and the age-old adage that "something is better than nothing".

How does it work?

The insurance works in a simple way; if you are diagnosed with a critical illness (as defined in the policy document's list of such illnesses and conditions), the policy pays out a tax-free lump sum to you. As already mentioned, the amount of that pay out is determined by the amount you have been paying in monthly premiums.

A further point to bear in mind is that, just like term life insurance, critical illness cover is typically written for a specific number of years (once again, the "term" of the insurance). Thus, if you are diagnosed with a critical illness within, say, a twenty-year term, the insurance policy pays out the previously agreed lump sum. If no such diagnosis is reached during the insured term, then no payout at all is made by the insurer.

As might be seen, therefore, there are a number of similarities in the way in which illness cover and life insurance operate. Indeed, many insurers offer the option of a combined critical illness and life insurance policy. In that case, you are covered - and your dependants are also more financially secure - in the event either of your contracting a critical illness or dying within a stated term (although such policies are typically restricted to a single payout).

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