Not only is our health important in being able to work and earn our income but also to provide & enjoy life with our families and loved ones. Its ironic that we take protection on our TV’s, carry a spare wheel in our cars, but yet forget to take out critical illness cover for ourselves which is the biggest emergency we could ever experience.

Where does the income come from if today you are diagnosed with an illness? Who suffers? Your friends or you and your family? If we are the people that bring in the income then why do we not take steps to protect our tomorrow?

Critical illness cover is an insurance that is designed to pay out a cash sum if the policyholder is diagnosed with a particular condition. The conditions covered vary from company to company but in general include medical conditions, known as Critical illnesses, such as heart attacks, advanced cancers, strokes and loss of sigh and limbs, which affect us all and are not uncommon.

If you are single with no dependents then you may want a stand-alone policy, as you may not have any need for life insurance. If you have existing, competitively priced, life insurance, you may be able to ‘top it up’ with some stand-alone critical illness cover. Not all critical illnesses will be covered under the policy, so compare the key facts document of the critical illness providers before you buy.

You are sometimes not covered for pre existing conditions.

Usually taken to protect either a mortgage or to provide help against loss of earnings, the critical illness cover runs for a set number of years and can either have a level (term critical illness cover), decreasing (mortgage critical illness cover) or index linked (increasing critical illness cover) benefit.

The diseases that a critical illness insurance covers may be the most common causes of death. Therefore, the idea of a prepayment can mean that it is a form of benefit that may be paid at a later moment. Prepayment can therefore be a wise option to have on a critical illness cover. The complexity of critical illness cover may demand a lot of attention especially when you are going to be a first time buyer. You tend to get better value by including life cover as the premiums are cheaper so effectively you are getting free life cover.

Things you ought to know….

·         If you want to have the confidence that a claim would be paid under your plan, it’s important that the information you give clear and accurate.

·         With Stand alone Critical Illness plans — There is no cash-in value at any time, so if you stop paying your premiums before the end of the payment term, your plan and critical illness cover will end 30 days after the last premium was due and you’ll get nothing back.

·         As with any protection insurance policy and in particular with critical illness and critical illness with life insurance, you will find that as your age increases, so to will your premiums. Your age is accounted for during your initial quotation and any further increases to your premiums will be as a result of medical conditions or occupation over age, so the earlier you can take out the cover the better for you.

·         Policy payout may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation. The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed. The survival period used varies from company to company, however, 28 days and 30 days are the most common survival periods used.

·         Plan/contract terms contain specific rules that define when a diagnosis of a critical illness is considered valid. It may state that the diagnosis need be made by a physician who specialises in that illness or condition, or it may name specific tests, e.g. EKG changes of a myocardial infarction, that confirm the diagnosis.In some markets, however, the definition of a claim for many of the diseases and conditions have become standardised, thus all insurers would use the same claims definition.

·         In 1983, four conditions was covered by the policy, i.e. heart attack, cancer, stroke and coronary artery by-pass surgery. Since then various conditions were added and now the most comprehensive coverage is offered with 154 illnesses covered with 26-38 being the main.

·         Critical illness cover was originally sold with the intention of providing financial protection to individuals following the diagnosis or treatment of an illness deemed critical. The finances received could be used to: pay for the costs of the care and treatment; pay for recuperation aids; to pay debts off; replace any lost income due to a decreasing ability to earn; or even fund for a change in lifestyle.

The number of Critical Illness (CI) claims made in 2008 was up by 14 percent on the previous year, new figures from one insurance provider show.

Waiver of Premium: if illness prevents you from working your monthly premiums are paid on your behalf for after a set deferment period.

Survival Period: most policies require you to survive for a specified period following a critical illness diagnosis, typically 14 days to 3 months.

Check Permanent Total Disability: check the definition of ‘permanent total disability’. Some policies define it as being unable to perform any job whilst others define it as being unable to continue in your previous occupation.

Check Children: some policies will pay out a fixed lump sum should one of your  children be diagnosed with a critical illness. The terms and conditions of policies may vary, check.