Critical illness insurance : What is covered?

A critical illness policy only provides protection for specific listed diseases.

• Some policies only cover cancer

• Some only cover female cancer

• Some also cover total and permanent disability

• Some also cover a wider range of disabilities

Amount of critical illness cover

The policy covers a set sum, which you choose. Some policies have minimum and maximum limits. Cover is often between £100,000 and £ 250,000. The sum you choose may have to last you 10 or 20 years, so too low a figure may not be enough. If you choose a Life policy with Critical Illness, the critical illness amount may be limited to the full amount of, or a fraction of, the life sum assured.

• Some policies allow you to increase the sum assured during the life of the policy

• Some policies include, or offer as an option, the ability to increase the sum insured at each renewal, in line with inflation.

• Some policies may reduce the sum assured during the life of the policy, particularly if it is linked to a mortgage where the amount you owe the mortgage provider reduces over the years.

Policies, which include cover for children, will have a lower sum insured on children, often based on a proportion of the adult sum insured.

How long will cover last?

Some policies (often called term-assurance ) are limited to a specific number of years. This period may be renewable after the first period, which can be one or five years. Some policies ( often called whole-of-life based ) continue as long as premiums are paid.

There may be restrictions on how long you can continue cover; e.g. retirement or reaching the age of 65, whichever happens first. There may be an overall limit on how long the policy can last, before a new one has to be taken out e.g.25 years

Illnesses/conditions covered

There is no such thing as a standard Critical Illness Policy. Every insurer has their own variation. This is an area which changes quite regularly as insurers seek to keep up to date. A list of diseases may look simple, but in practice is only a guideline. Deciding what is or is not the cause of an illness, and whether or not it fits into a particular listed disease, is often a cause for debate, discussion, medical opinions and analysis.

You can compare what is offered by different companies by looking at their “key features documents”. This is a document provided by most insurers outlining what diseases are covered and which are excluded.

ABI definitions

In an attempt to make it easier for people to compare policies, insurance trade body, the ABI (Association of British Insurers) has agreed with insurers, a list of diseases and interpretations.

Insurers are not obliged to stick to this list; they can amend, add to or remove any disease. Not all insurers are members of the ABI. On some of the illnesses, there are agreed definitions. On others, these are still being worked on.

The ABI list

Alzheimer's disease

Angioplasty

Aplastic anaemia

Aorta graft surgery

Bacterial meningitis;

Benign brain tumour

Blindness

Cancer

CJD;

Coma

Coronary artery by-pass grafts

Deafness

Diabetes mellitus

Heart attack

Heart valve replacement or repair

HIV infection

Hodgkin's disease

Keyhole heart surgery

Kidney failure

Liver failure

Loss of speech

Loss of hands or feet

Loss of independent existence

Major organ transplant

Motor neurone disease

Multiple sclerosis

Open heart surgery

Parkinson's disease

Pre-senile dementia

Progressive supranuclear palsy

Pulmonary artery surgery

Rheumatoid arthritis

Severe lung disease

Stroke

Terminal illness;

Third degree burns

Traumatic head injury

Notes on illnesses

• Most insurers have now dropped Angioplasty as a condition, following new surgical techniques, which now allow this procedure to be undertaken under a local anaesthetic and for the patient to be released from hospital the same day.

• AIDS from blood transfusion or occupation, is often included with HIV.

Exclusions

Any condition or illness not specifically listed. The list varies by insurer but usually includes;

• Alcohol or drug abuse;

• Criminal acts;

• Flying (except as a passenger in a commercially licensed aircraft);

• Hazardous sports and pastimes;

• HIV/AIDS (except where specifically listed as a covered condition, for example if contracted from a UK blood transfusion)

• Living abroad

• Self-inflicted injury;

• Unreasonable failure to follow medical advice;

• War and civil commotion.