Critical Illness Cover

It is important not to confuse terminal illness cover with critical illness cover. A terminal illness is an illness from which medical practitioners expect you to die, usually within a relatively short period of time such as twelve months. A chronic illness is a serious illness but one which you can recover from and one without a set life expectancy.

If you are diagnosed with a terminal illness, your life insurance will usually pay out. If you are diagnosed with a critical illness, your life insurance will not usually pay out unless you have chronic illness cover. If you wish to protect yourself in the event of a chronic illness, you should discuss your insurer's conventional response to chronic illness diagnosis with your provider. You may be advised to take out separate critical illness cover or be able to add this cover into your basic policy by agreeing to pay higher premiums.

Critical illness cover is a common additional policy that can be merged with whole-of-life insurance policies, but can also be purchased as a separate policy. Although this cover will cost you more than a basic life insurance policy, it can provide invaluable financial assistance if you suddenly fall seriously ill. You should consider this cover seriously if your family has a history of bad illness: critical illness cover pays out when you are diagnosed with a serious, or critical, illness.

Taking out life insurance and adding critical illness cover to the package can prove to be the cheapest option, but it is not always the case. Investigate the cost of taking out two separate policies, perhaps with two different insurance providers, and compare the cost with the financial cover you would receive. If you choose to take out life insurance and critical illness cover as a package deal, you should examine the way in which these two covers affect one another. Some combined deals will pay out once: when you are diagnosed with a critical illness or when you die. Other policies will pay out twice: when you are diagnosed with a critical illness and when you die. Ask your insurer about the way in which their policy works, to ensure that the level of cover you want will not be compromised.

Each insurance provider will have their own definition of which diseases are covered by the term 'critical illness', and these should be detailed in their 'Key Facts' document. You should read this carefully so that you are aware of exactly what your policy covers you for, and purchase extra cover as appropriate. Critical illnesses may include:

• Alzheimer's Disease
• Aorta Graft Surgery
• Benign Brain Tumour
• Blindness   
• Cancer*
• Coronary Artery By-pass Surgery
• Coma
• Deafness
• Heart Attack
• Heart Valve Replacement
• HIV/AIDS (Certain requirements exist)  
• Kidney Failure
• Loss of Limbs / Loss of Speech  
• Major Organ Transplant  
• Motor Neurone Disease  
• Multiple Sclerosis  
• Paralysis/Paraplegia
• Parkinson's Disease
• Heart Attack
• Stroke
• Third Degree Burns
• Permanent Total Disability

*Those conditions in bold indicate the seven 'core' conditions that are covered as standard in all critical illness policies, although some insurance providers will make specific exceptions: they may not cover every type of cancer, for example.

Your insurance provider is allowed to ask you if you have had a positive HIV/AIDS test. You are not at a disadvantage if you were tested for HIV/AIDS in the past, unless the test was positive. If you have tested positive for HIV/AIDS, you may not be able to find life insurance or you may have to pay very high premiums. If you contract HIV/AIDS your insurance provider will usually pay out only if you became infected as a result of a blood transfusion or during the course of medical treatment; after a physical assault; during the course of performing your normal duties whilst employed in the emergency services, a medical profession or in the armed forces. You should also have become infected after taking out the critical illness cover and whilst in the United Kingdom.

Normally, if you contract a serious illness as a result of one of the following activities, you will not be covered:

• Aviation
• Living Abroad
• Criminal Acts
• Pre-existing conditions
• Drug Abuse
• Self-inflicted injury
• Failure to follow medical advice
• War and civil commotion
• Hazardous sports

The best way to decide if you require critical illness cover is to ask yourself whether you would face financial difficulties if you became seriously ill. For example, could you continue to make your mortgage repayments if were unable to continue to work? Be careful not to confuse the cover that you can get from a critical illness policy with cover from private medical insurance or income protection insurance. Private Medical Insurance covers the cost of private health care if you suffer from a curable, short-term condition.

Private medical treatment in the UK is too expensive for many people, and so private medical insurance helps to ensure that the benefits of private health care are financially accessible to all. Income Protection Insurance provides a monthly tax-free income, in the event that you are unable to work due to illness or accidental injury. Critical illness insurance however will provide you with a tax-free lump sum when you are diagnosed, to allow you to concentrate on recovering and not worry about paying your bills.

You will usually be able to apply for critical illness cover if you are currently in good health and are between the insurance provider's age limits, usually between ages eighteen and sixty-nine. If you have a family history of a specific family illness you may have to pay higher premiums because you are considered to be at risk of developing this condition. Most critical illness cover policies will not cover you for pre-existing health conditions.

When you are diagnosed with a critical illness you will need to contact your insurer, who will guide you or your relative through the claims procedure. Usually the insurer will simply need confirmation from your doctor or medical specialist to prove that you are suffering from a critical illness. Sometimes claims will take up to a month to be processed after your initial enquiry, whilst other claims will only be processed when the insurance company has proof that you are sufferíng from a long-term illness. Even if you subsequently fully recover from the illness, you are entitled to keep the money that you have received. Once a claim has been made, your critical illness cover policy will usually be void.