What is Critical Illness Insurance?

"It's really important to understand what illness are covered by your Critical Illness Insurance policy" , says Charles Challiner spokesman for Lloyds Insurance Underwriting.

What is Critical Illness Insurance?

Critical Illness Insurance pays a tax-free lump sum if you are diagnosed with a serious illness or critical illness. The insurance company always provides a list of the serious illnesses that covered by the policy - a typical sample is shown below.

You will find the schedule of critical illnesses within the document entitled "Key Features" which Moneyquest will send to you if you want to proceed.

If you are diagnosed with a "Critical Illness" you may well survive for very many years. During that time your earned income may well drop to nothing or just a fraction of what it was before the illness was diagnosed. In these circumstances, the financial effects on your family could be disastrous! Critical Illness insurance is specifically designed to help.

Of course you may never suffer a critical illness - we sincerely hope so- but consider these facts: -

· 35% of men and 46% of women who develop cancer survive at least 5 years.

· 78% of stroke victims survive more than a year.

· 1 in 5 men and 1 in 6 women will suffer a critical illness before their normal retirement age.

Could your family cope with the financial effects of such illness? Critical Illness Insurance is the wise way to cover yourself against the financial affects of such a devastating event.

Please Note: Terminal Illness insurance is not the same as Critical Illness Insurance. Terminal Illness is automatically included free of charge free on most life insurance policies. Critical Illness cover, however, is always an optional cost extra.

The important difference between Critical Illness and Terminal Illness is that Critical Illness pays out immediately after you are diagnosed with a serious illness which is specified within your policy. On the other hand, Terminal Illness Insurance only pays out if your doctor expects you to die within 12 months of initial diagnosis. This is a subtle, but very important, difference.

To illustrate the point, say you were diagnosed with multiple sclerosis, an illness from which you can be expected to survive for many years. In this circumstance, critical illness insurance would pay out immediately but Terminal Illness cover would not.

Now re-consider the fact that 35% of men and 46% of women who develop cancer will survive for at least 5 years. We trust that you'll now appreciate the advantages of Critical Illness Insurance!.

What illness is scheduled as Critical Illnesses?

Firstly, it's important to point out that the insured illnesses do vary between policies. That's another good reason for taking advice from your Adviser at Moneyquest.

The types of critical illness included within comprehensive Critical Illness Insurance Policy are likely to include the following: -

Alzheimer's disease
Angioplasty
Aorta graft surgery
Aplastic anemia
Bacterial Meningitis
Benign brain tumour
Blindness
Cancer
Coma
Coronary artery by-pass surgery
Creutzfeldt-Jakob disease
Deafness
Dementia
Heart attack
Heart valve replacement or repair
HIV or AIDs (assault, blood transfusion, occupational duties or accident)
Keyhole heart surgery
Kidney failure
Loss of independent existence
Loss of limbs
Loss of speech
Major organ transplant
Motor Neurone disease
Multiple Sclerosis
Paralysis/Paraplegia
Parkinson's disease
Stroke
Third degree burns
Total permanent disability
Children Cover

What is the significance of the "Survival Period"?

In order to make a valid critical illness claim you are required to have survived for a minimum number of days following diagnosis. This delay period is known as the "Survival Period". It is usually 28 days but some insurers have reduced it to 14 days. Please check your proposed policy. If you were to die within the Survival Period your claim is invalid.