Considering whether to purchase a critical illness plan is one of the most important
financial decisions you will ever make for your family or business.
A critical illness, such as cancer, stroke or heart attack, affects one-in-four women
and one-in-five men before they reach retirement age.
Tax-free lump sum- Critical illness insurance pays a tax-free lump sum if you are
diagnosed with one of the conditions covered. It can also be used to buy specialist
private medical treatment, meet ongoing costs, pay for convalescence.
An appropriate critical illness plan can provide for your mortgage and other debts
to be repaid if a critical illness strikes you or your partner.
Most of us automatically consider life assurance to protect our families and are
often prompted to do so when taking on a mortgage.
Unfortunately a good many of us will suffer a critical illness during our working
lives which can destroy all of the good intentions and planning previously made.
Clearly a life assurance policy cannot help and whilst an income protection plan
may provide a reduced income the mortgage and other debts will still remain.
Having suffered a heart attack, for example, you would want the ability to repay
the mortgage and other debts so as to reduce future stress and possibly another heart
A CI plan can provide that flexibility. It can provide you with choices and the financial
ability to implement them.
Mortgage insurance is used to pay or partially repay the mortgage if diagnosed with
a critical illness. This type of policy generally decreases line with mortgage balance.
This means you only pay for the amount of cover needed.
Term insurance pays out a single lump sum if you are diagnosed with a critical illness.
This amount of insurance remains constant throughout the life of the policy.
Whole of Life insurance
Whole of Life insurance provides critical illness protection throughout life. The
cost is generally set for on-going 10 year periods with more frequent reviews after
There have been numerous articles on the benefits of critical illness insurance,
and many surveys intended to highlight the value of conditions covered and distinguish
between various plans.
Surprisingly there has not been any definitive attempt to look beyond the conditions
in order to assess the worth or relative merits of competing plans.
This guide aims to resolve this lack of understanding. It seeks to explain exactly
what is and is not covered by a critical illness plan.
It highlights the conditions that may be included within a plan, what they actually
are, and the statistical likelihood of making a claim.
It is too important to gamble - use a specialist adviser
In April 2009 the Financial Services Authority published research carried out by
the British Market Research Bureau into consumer understanding of Critical Illness
plans. The report found: