What is Serious Illness Cover?

07 December 2016
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This type of illness cover is referred to by a number of names including serious illness cover and critical illness cover. More recently the cover is referred to as Specified Illness Cover because the policy specifies exactly which illnesses are covered and defines the stage of the illness required in order to make a successful claim under the policy.

Critical illness cover (CIC) is a long-term insurance policy designed to pay a lump sum on the diagnosis of certain life-threatening or debilitating (but not necessarily fatal) conditions such as a heart attack, stroke, cancer, multiple sclerosis and loss of limbs.

The illnesses covered under these policies differ between the various Life Insurance Companies and it is therefore important to seek independent advice.

The age Group from 50 to 60 accounts for approx 40% of claims and surprisingly the lower age group 30 to 40 accounts for approximately 30% of claims. The cost of arranging serious illness cover rises dramatically as one gets older.

So if serious illness cover is products that you are considering, please don't leave it until you are too old to arrange cover.

See the following for cost comparison details serious illness cover cost comparison

For an example of the breakdown of critical illness claims statistics for a major life insurance company please click Critical illness statistics.

The illnesses covered will be specified in the policy along with any exclusions and limitations – these differ between insurers.

CIC policies usually only pay out once, so are not a replacement for income.

Important. You should always read the policy information in detail to ensure you understand what serious illnesses you are covered for and the stage of illness at which an insurer will pay out.

Who is likely to buy it?

Many people buy CIC when they take on a major commitment such as a mortgage. Our consultants will advise you on the costs and benefits and the options available. Unlike mortgage protection insurance, critical illness insurance is never a condition of mortgage approval.

What are the main features?

Before you take out cover you should consider the following:

  • Critical illness cover pays you a lump sum if you are diagnosed as suffering from one of the specified illnesses.
  • Policy summaries will often set out a list of illnesses covered, but this is only a guide and full details will be in the policy document. This will also set out the criteria that have to be met before the insurer will pay a claim, including defining the level of severity of the illness. As an example, in the case of cancer, not all cancers or stages of cancer are covered. And for heart attacks, the insurer will need to have medical evidence of the severity of the condition before paying a claim. So it is important that you along with your consultant check which illnesses are covered.
  • CIC does not cover simply any sickness that affects your ability to work – it is specific about which illnesses are covered.
  • Some insurers exclude all pre-existing conditions but others will decide on the basis of your personal medical history.
  • CIC differs to other types of protection insurance such as income protection and it is important that you fully understand what it does and whether it is right for you. Income protection policies pay out an income to replace lost income in the event of certain sicknesses.

Before you take out the cover, we will provide you either a Policy Summary or Key Features document. This will set out the key features and benefits, as well as any significant or unusual exclusions or limitations. If you have any queries about these you should ask our consultant to explain the cover in more detail. This will help you make an informed decision on whether to take out the cover.

If the insurer imposes any other conditions, perhaps because of your own or family medical history, you should be told what they are before you take out the policy. Detailed policy terms and conditions will be provided in the policy document the insurer will send you after you take out the cover – make sure you read it so that you know what you're covered for.

If you've decided CIC is right for you

  • It's essential that you give full, honest answers to questions you are asked about both your own and family medical history. Giving incomplete or wrong information could invalidate your policy and any claim you make on it.
  • If you are not sure, it is better to mention things. Otherwise the policy may not pay out when you need it.
  • Many insurers will allow you to send medical information directly to their Medical Officer, so if you do not want to discuss personal or sensitive information with our consultant we will make the necessary arrangements on your behalf.
  • The premiums we quote are based on current standard rates. The insurer will confirm the actual premium, and the terms, after it has considered your medical history.

Please read the documents you are given and ask questions if you don't understand anything. Remember CIC only pays a lump sum. If you want insurance to cover lost income or your mortgage repayments, ask if there are other types of insurance that might be more suitable for your circumstances.

More information

I already have CIC but want to change my mortgage and increase the cover. Should I cancel my existing policy and take out a new one?

If you are planning to replace a policy, never cancel the old policy until the new policy is in place.

You might find that by replacing a policy you lose some of the benefits if you have developed any illnesses since you took out the first policy. Pre-existing conditions may not be covered under the new policy. You may be able to get cheaper cover if you switch to another company but the cover might not cover all of your needs. So it is very important that you understand exactly what benefits are provided.

So think very carefully before you replace or switch your policy.

Some policies allow you to increase your cover – particularly after lifestyle changes such as marriage, moving home or having children. Ask your insurance company or financial adviser for information.

If you cannot increase the cover under your existing policy you could consider taking out a new policy just to 'top-up' your existing cover.

Can I cancel the policy if I change my mind or I'm not happy with cover it provides?

You can cancel within a specified number of days of taking out the policy and get your money back provided you have not made a claim. After that, you can still cancel the policy at any time under most contracts, but you may not be entitled to a refund of the premiums you have paid. Your cancellation rights should also be set out in the key policy information.