CRITICAL ILLNESS COVER
One in two people in the UK are diagnosed with cancer in their lifetime. One in three, before the age of 65.
Many other illnesses can have a devastating impact on you, your business, your family and your finances, should you be unfortunate to suffer one.
Critical or Serious Illness Insurance pays you a tax free lump sum on diagnosis of a specific medical condition, or you undergo (or join the waiting list for) a surgical procedure covered by the insurance provider on your policy.
Typically it's set up to provide anything from a couple of years salary to also include the amount required to clear your mortgage and other loans in full.
If you require advice on cover that best meets your needs, contact us. We offer online appointments across the UK where we can advise you over a video call on the most appropriate type of cover for your particular circumstances sourcing the UKs leading 5 star Defaqto rated insurance providers. We do not charge a fee for our advice and we are regulated by the Financial Conduct Authority.
VitalityLife explain how their serious illness cover works and how it is different than other critical illness plans
How does it work
By it's very nature critical illness is designed to provide money when it's needed most i.e. when serious ill health knocks you over.
Around 70% of all claims paid are for three conditions; cancers, heart attacks and strokes. Many other serious conditions are covered e.g. Multiple Sclerosis, benign brain tumour, blindness, kidney failure and many more.
Typically these plans cover around 30-40 conditions. The top five providers average around 75 conditions covered on each policy.
The most conditions covered by a provider is as many as 174. Depending on your cover, not all conditions have to be critical - many providers pay capped benefits between £25000 and £50000 without affecting your cover for those illnesses that are less severe.
Our advisers at Optima Health & Life have adept knowledge regarding the range of critical illness policies in the market.
What illnesses does critical illness insurance cover?
Most insurance providers will cover the following illnesses and treatments within their critical illness policy:
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Aorta graft surgery – for disease and trauma
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Aplastic anaemia – with permanent bone marrow failure
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Bacterial meningitis – resulting in permanent symptoms
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Benign brain tumour – resulting in permanent symptoms or specified treatment
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Blindness – permanent and irreversible
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Cancer – excluding less advanced cases
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Cardiac arrest – with insertion of a defibrillator
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Cardiomyopathy – of specified severity
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Coma – with associated permanent symptoms
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Coronary artery bypass graft
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Creutzfeldt-Jakob disease
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Deafness – permanent and irreversible
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Dementia including Alzheimer’s disease – resulting in permanent symptoms
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Encephalitis – resulting in permanent symptoms
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Heart attack – of specified severity
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Heart surgery – with thoracotomy
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Heart-valve replacement or repair
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HIV caught from a blood transfusion, a physical assault or at work
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Interstitial lung disease
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Kidney failure – requiring permanent dialysis
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Liver failure – end stage
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Loss of hand or foot – permanent physical severance
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Loss of speech – total permanent and irreversible
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Liver failure – end stage
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Loss of hand or foot – permanent physical severance
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Loss of speech – total permanent and irreversible
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Major organ transplant – from another donor
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Motor neurone disease and specified diseases of the motor neurones – resulting in permanent symptoms
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Multiple sclerosis
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Paralysis of limb – total and irreversible
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Parkinson plus syndromes – resulting in permanent symptoms
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Parkinson’s disease – resulting in permanent symptoms
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Pneumonectomy – for disease or trauma
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Primary pulmonary arterial hypertension – resulting in permanent symptoms
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Pulmonary artery replacement – with surgery
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Removal of an eyeball as a result of injury or disease – permanent physical severance
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Respiratory failure – of specified severity
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Spinal stroke
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Stroke – resulting in specified symptoms
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Systemic lupus erythematosus – of specified severity
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Terminal illness – where death is expected within 12 months
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Third-degree burns – covering 20% of the body’s surface area or 20% of the face
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Traumatic brain injury – resulting in permanent symptoms
This list is an example from one provider. Each providers' cover will differ.
Summary
Put simply, critical illness cover is protection for a business, an individual or their family in the event of the insured falling seriously ill. It provides a tax free lump sum payment if the diagnosis of the person covered is compatible with the medical definition of one of the conditions listed in their policy during the term.
You can add children to your plan and provide cover for child illnesses as well as adult.
Some providers pay multiple times when you choose to arrange the plan benefits to do so.
There is no waiting period for critical illness plans - they pay out if your diagnosis is as listed in the plans definitions.
You don't have to have a dire prognosis to your condition, critical illness pays on diagnosis of your condition.
Critical illness cover is not the same as life insurance which pays out on death or terminal illness. Terminal Illness is not the same as critical illness.
Often critical illness is bought which includes life insurance as it is economically beneficial to include it.
In 2022, UK insurers paid £1.2 billion in critical illness claims supporting more than 19000 individuals.
In contrast, £3.9 billion was paid out in term life insurance claims to 53,000 surviving families.
The total of all UK protection claims for life insurance (individual and group), income protection and critical illness claims amounted to almost £7 billion, to over 300,000 successful claimants.
98% of all claims were paid.
Source: Association of British Insurers
Critical Illness pay outs can be used at your total discretion. The money can help pay off your mortgage, pay for medical care that would not ordinarily be available, clear debts, recuperate abroad or make alterations to your home, such as wheelchair access, should you need it.
Critical illness is more expensive than life insurance but that's for an obvious reason - it is far more likely to pay out than life insurance. Many claimants go on to fulfil as best a normal life as possible.