Current data indicates that around 25% of us will suffer from some form of serious illness before we reach retirement age. Though nowadays, due to medical advances, many of these conditions may not prove to be life-threatening, the chance of incapacitation, disability and/or an extended period of recovery could mean that it may take some time before you can return to your usual working practices, if at all.
To ease the financial difficulties of such circumstances Critical Illness (CI) Insurance, also known as Dread Disease Cover, is designed to pay out a tax-free lump sum if you are diagnosed with a range of specific medical conditions during the term of the policy. The conditions covered differ with each policy but they usually include common serious health problems such as kidney failure, strokes, heart attacks and various types of cancer; policy holders can also receive a payout if they are left disabled as a result of illness or accidental injury. The majority of policies, however, exclude conditions such as HIV/AIDS or those caused by alcohol/drug abuse and self-inflicted injuries.
Most insurance providers will offer Critical Illness cover to anyone between the ages of 17-70 years old. You can buy policies for any duration, although you will usually have to wait about three months before making a claim. Before obtaining a quote you will also need to decide on the assured sum – the amount paid out in the event of a claim – which should be large enough to cover any mortgage or loan repayments as well as a substantial amount to cover things such as medical expenses and the potential financial needs arising from disability etc.
The cost of a policy is generally based on gender, age, length of policy and the assured sum amount. Some insurance companies will also take into account your state of health and your family’s medical history when calculating your premium quote. Some policies have fixed a premium for the duration of the policy (sometimes called a guaranteed premium), which may be more expensive but could save you money in the long run since CCI premiums tend to rise faster than the rate of inflation.
