The term dread disease is not used very often now.  It became critical illness mainly due to the increasesed amount of illnesses covered.  Critical illness is the widely used name now although it is still also known as serious illness insurance, crisis cash and living assurance.

Illness insurance can be anything between critical illness, income protection or mortgage payment protection insurance.  The fact is that further questions need to be asked.  If someone wants illness insurance how long do they want cover for?  What kind of benefit are they seeking?  What is the purpose of cover?  The only chance someone has of entering in the search term ‘illness insurance’ is if they find a site that clearly explains the various options available to them, so here goes:-

Critical Illness Insurance

Critical illness insurance is lump sum benefit (also known as dread disease and CIC) designed to pay out on diagnosis of a specified disease or illness.  More often than not people arrange critical illness policies using term assurances where the benefit is set for a specific term.

Mortgage Payment Protection Insurance  

Mortgage payment protection insurance is designed to pay your monthly mortgage amount plus associated costs for a limited term (usually 12 or 24 months) if you are made redundant or you suffer an accident or illness.  Policies can be set up to cover accident/ illness or redundancy or both.  There is no medical underwriting with this type of policy.

Income Protection

Income protection insurance is one of the most flexible types of insurance available.  Any accident or illness is covered (subject to a few exclusions such as self inflicted injury) and you can arrange for a replacement income to be paid to you after a deferred period.  The benefit can be paid until you return to work, retire if you are unable to work, or if you die before the end of the term.  Usually the maximum you can insure your salary for is around 60% of your current gross pay but benefits are paid tax free (under current tax laws).

Hopefully ‘illness insurance’ might now lead someone to finding the product that matches their needs a little better.

Critical Illness Insurance is still a relatively new type of insurance and was first introduced in South Africa in 1983.  The founder was Dr Marius Barnard.  It is interesting that it was a doctor who saw the benefits of a policy that would pay out lump sums to people diagnosed with life threatening illnesses rather than an insurance company.  Dr Marius obviously saw first hand just how devastating a critical illness could be not only physically and emotionally but also financially.

Since its launch many life assurance companies have launched their own critical illness policies but to be fair these did vary in the early days with the illnesses that they covered.  The Association of British Insurers helped matters by putting together a standard list of illness and the insurance definition of the illnesses covered so that both life assurance companies and their customers could easily see just what the definition of a particular illness was.

Because there was early confusion as to what the definition of an illness was, critical illness claims settlement history was erratic.  Also, because this policy was based on medical history there were a high number of claims rejected based on non-disclosure where customers had not declared previous medical conditions that might have affected the underwriting of the policy.  Thanks to the ABI definitions and the adviser community educating customers both the claims settlement history has increased year on year and the non-disclosure rejections have decreased at the same time.  It is always better to declare everything so that an underwriter has a complete picture to base cover on.

Each year life insurance companies release their claims settlement history in an effort to be transparent.  They publish the amount of claims they have successfully paid out on, the total amounts, the average claim size, average age of claimant but more importantly they publish data on the amount of unsuccessful claims.  The unsuccessful claims are a result of non-disclosure or the illness not meeting the required definition.  According to Moneyfacts insurers paid out an average of 90.8% of all claims last year.  This is an average across the insurance companies so some did better than others.  Legal & General paid out 93.6%.

Enter the term critical illness payouts into Google and you won’t have to go far before your are reading horror stories about life insurance companies not paying, or articles telling you that policies rarely pay out.  These types of stories will always be there because they are true.  The life assurance companies have already told us about the claims they rejected and why.  Some of those rejects will be justified but some will have a case to argue and where better than the internet?

The simple fact of the matter is that critical illness policies are designed to pay out when you need them most, when you are diagnosed with an illness that is so threatening that it changes your life permanently in most cases.  A lot of people who have claimed on their critical illness policies do not return to their normal occupation yet they still have homes and bills to pay so a lump sum benefit can be very welcome.  One of the reasons people decline critical illness is the cost.  If cancer research tell us that we still have a 1 in 3 chance of being diagnosed with some form of cancer during our lifetime then that is something worth insuring against.  It is clearly going to cost more than life assurance.

So is critical illness cover worth it?  There is no definitive answer to this question.  Policies not being paid out is no longer an excuse for people to decline cover.  There will always be people who are worried enough about their homes and lifestyles to bet against a 1 in 3 statistic and then there will be those prefer to take their chances.  Which one are you?

Ask any one in the street if they would accept free critical illness cover and just about everyone (I’m guessing here) would say yes so there is clearly value in the product as far as consumers are concerned. So what stops people from just going out and buying cover for themselves?  Could it be that they don’t want to have to visit a financial adviser who will then tell them that they should consider other products too?  Could it be that the product is complicated and they haven’t the time or inclination to find out what is the best product for their needs?  The answer is probably both.

The internet is changing this though.  It is now possible to find out more information about critical illness policies and what is offered.  It is possible to get free online quotes too through websites like this.  However, anyone wishing to purchase critical illness insurance should be able to do it easily and correctly so advice is something that should be considered before you buy.  The more specialist websites such as this there are in the future, the more people will be inclined to just buy cover of their own accord without being ’sold’ it.  This in turn will make critical illness cover a more polular product and sales will increase.

Below are two illustrations, the first showing likely monthly premiums based on non-smokers accepted on standard terms for life insurance only over a 25 year level term assurance with a sum assured of £100 000.  The quotes are based on occupation category 1 and are valid at the time of publication. 

Life and critical illness quotes are as follows:-

Both sets of quotations include our 50% commission rebate which lowers your premiums.

As you can see, critical illness cover, for all of its benefits does not actually cost that much on a month to month basis when you consider that a cup of coffee is often more than £2.00. 

If you have been thinking about critical illness cover do not delay, request a personalised quotation today by clicking here.

The life insurance industry has always been one where products are offered and you pay a set premium for them depending on your age and state of health.  Have life insurance companies moved with the times though?  Should they be asking what people actually want?  If someone simply wants a policy to cover cancer why can’t they have this policy?  Why do they have to pay for 30 other critical illness definitions they are not interested in?  No wonder critical illness can be a hard sell. 

Maybe life insurance companies need to change the way they offer products.  They have the statistics so why not just offer a menu driven approach so that customers can pay for what they want?  Why can’t someone have a policy that covers them for cancer, stroke and parkinsons disease?  If one life assurance company offered this kind of menu driven approach how much extra business could they pick up just by listening to their customers?

No life assurance company in the world can design the best critical illness policy.  That kind of policy can only be designed by those who will be paying for it so what would you want in your policy?  What ideas could you pass on to make a better policy worth having?  Please leave comments so that we can see how far this could go.

  Buying a house is a massive gamble.  Without any insurances such as life insurance or mortgage protection you have to hope that over the next 25 years you will not die, you will not suffer a long term illness, you will not be made redundant and you will not be diagnosed with a critical illness.  25 years is a long time and at least one of these events could easily happen so insurances should be part of the mortgage budget, not an additional extra.  Without the insurance option you risk losing your home.  Who wants that?

The British attitude to insurance is wrong.  Ok, which ever way you look at it insurance is a lose lose situation.  If you do have to claim on your policy it’s because someone has suffered.  If you never claim on your policy you’ve paid all of those premiums but never seen any benefit.  Life insurances and mortgage protection should be seen as a back up plan, something to be proud of, something to show just how organized you are in your home ownership plan.

The American attitude to life insurances is very different.  Americans seem to take pride in their life insurance plans.  Life insurance is something they worry about.  They want to make sure that the back up plan is there should it ben needed.  Most of all Americans seem to be proud of their planning and talk about ensuring that their life insurance is up to date.

Could I be wrong on this?   Please leave comments.

She seemed the be the best candidate in my opinion and should do well.  It’s a shame in these programmes that we rarely get to see what they end up doing.  Sir Alan said that she would be on the digital division providing screens to hospitals and surgeries.  To me this sounds like she will be selling advertising space.

I also wonder how the filming process is done.  Surely it can’t be filmed over a 12 week basis as the contestants would spend most of the time sitting around in the penthouse waiting for the next challenge.  Maybe it is filmed over a 3 week basis and the challenges are filmed back to back to keep the pressure on?

There is only one reason why a life assurance policy would pay out, that being on death within the term of the policy.  Policies will often cover terminal illness and payout before death actually occurs but apart from this death is the main reason why payouts are made.  In other words, if you are diagnosed with a critical illness, a life insurance policy won’t help you straight away but at least you’ll know that you have life insurance in place.

Critical illness insurance policies pay out when you are diagnosed with a critical illness or specified dread disease.  The comprehensiveness of policies can vary but most cover at least 20 standard illnesses including heart attack, stroke and cancer.  These illnesses are usually severe or life threatening but in most cases the sufferer can go on to live for years after the diagnosis.  A critical illness policy therefore takes care of you when you are alive. 

It is fairly obvious then, that life insurance and critical illness insurance are two very different policies but they do complement each other well.  If you had just been diagnosed with a critical illness and you received your insurance claim chances are you would be going through a fairly scary time.  You and your family might just take comfort in the fact that at least  you have life insurance as well.