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.

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.