Critial Illness Cover
This contract is designed to pay out a tax-free capital lump sum in the event of diagnosis of a critical illness. It is available in the form of both Term Assurance and Whole of Life, the latter being considerably more expensive than the former. The illnesses covered are defined within the policy schedule provided by the Insurer. The definitions and range of illnesses vary from company to company. The applicant will have to satisfy medical underwriting requirements, and this will determine the level of premium payable. The Whole of Life contracts will have an investment element like the life cover detailed above.
Critical Illness cover is available as a stand-alone contract as well as being linked to life cover, and endowment plans. Where it is included as an added option, most contracts will pay out in the event of critical illness or death whichever is first.
The majority of Critical Illness contracts include payment in the event of total permanent disability and many will pay smaller amounts where a lesser disability arises. The option of “buyback” can also be included. This enables the policyholder to retain the plan following a claim without further medical evidence. This will often incur increased premiums. In some cases, certain illnesses may be excluded from the policy and therefore a payment will not be made in the event that the policyholder suffers from the illnesses specified.
Critical Illness Cover, when provided alongside Income Protection, offers valuable additional protection reducing the impact of lost future earnings and helping to cover expenses such as home modification, which often follow a serious illness.
