Critical Illness Insurance - Clan Financial Services

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Critical Illness Insurance - frequently asked questions

What is Critical Illness Insurance?

Critical Illness Insurance (also known as critical illness cover) is a policy that pays out a tax free lump sum of money upon diagnosis of a specified critical illness. Unlike life cover, Critical Illness Insurance pays out to yourself. It is more expensive than life cover because you are far more likely to suffer a critical illness than to die.

Many insurers also include free childrens critical illness cover with their policies.

What is Childrens Critical Illness Cover?

Free Childrens Critical Illness Cover is now included with many Critical Illness Plans in the UK. This means that when you take out the cover, a number of your children or potential children are also covered under the policy. Each company's definitions of child cover differs. One example of the cover is from Legal & General who offer 50% of your total cover up to a maximum of £25,000 for each child. The plan will automatically cover your natural, legally adopted and step children. The plan will also cover any children you have in the future.

It is important to remember that any claims made on the childrens cover is not subtracted from your cover and does not mean that your cover needs to stop.

How Much Critical Illness Insurance do I Need?

You can decide how much Critical Illness Insurance you require, or you can contact one of our experienced advisors. It's common for people to cover mortgages and debts with Critical Illness Insurance, however this is not always possible due to cost.

We recommend that if it's too expensive to cover the full amount of your mortgage/loan then you should consider covering a proportion of the liability or around 2-3 times your annual salary. This way at least you know that you have some additional income which can be used for mortgage payments, bills, specialist medical care or to make adaptations to you home if required.

What Conditions does Critical Illness Insurance Cover?

The important thing to remember is that Critical Illness Insurance is not a lottery, i.e. 'You are diagnosed as being ill so you are given a lump sum of money'. The policy is meant to provide cover against the financial hardships that can arise from you being seriously ill.

The Association of British Insurers (ABI) specify a number of illnesses and definitions that must be covered for a policy to be classed as a Critical Illness Policy. Some companies offer additional definitions and illnesses on top of these. For example Friends Life (formerly Bupa) cover around 50 conditions and operations and automatically include you into their Best Doctor's Scheme and BUPA Health Line Scheme.

ABI standard conditions - 6

• Alzheimer’s disease – resulting in permanent symptoms
• Deafness – permanent and irreversible
• Kidney failure – requiring dialysis
• Loss of speech – permanent and irreversible
• Motor neurone disease – resulting in permanent symptoms
• Traumatic head injury – resulting in permanent symptoms

ABI enhanced conditions - 17

• Aorta graft surgery
• Benign brain tumour – resulting in permanent symptoms
• Blindness – permanent and irreversible
• Cancer – excluding less advanced cancers but including advanced skin cancer
• Coma – resulting in permanent symptoms
• Coronary artery by-pass grafts
• Heart attack – of specified severity
• Heart valve replacement or repair
• HIV infection – caught from a blood transfusion, a physical assault or at work in an eligible occupation
• Loss of hands or feet – permanent physical severance
• Major organ transplant
• Multiple sclerosis – with persisting symptoms
• Paralysis of limbs – total and irreversible
• Parkinson’s disease – resulting in permanent symptoms
• Stroke – resulting in permanent symptoms
• Terminal illness (only with Life Insurance)
• Third degree burns – covering 20 percent of the body’s surface area or 30 percent loss of surface area of the face

If you are interested in finding out more about our Critical Illness Insurance, complete the form below and we'll contact you at a convenient time to discuss your requirements.