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Critical Illness Cover

Critical illness cover, which is also known as serious illness cover, living assurance, and critical illness insurance, is a type of insurance cover that pays out a large lump sum in the event of a policyholder being diagnosed with a serious illness. Usually, it only pays out if the policyholder survives for longer than a certain period, typically 14 to 30 days, after diagnosis.

Most policies cover a list of specified illnesses, such as cancer, heart attack, and stroke. You can arrange for the lump sum to be paid in a number of regular instalments or as a one off payment. The money is intended to cushion the financial impact of being diagnosed with a critical illness. The payment could be used to pay for private health care, recuperation aids such as mobility equipment, paying off debts such as a mortgage, or funding a change of lifestyle, but there are no strings attached to the payment, so you can spend it on anything you like.

In most circumstances, critical illness cover premiums are paid annually or monthly by direct debit or cheque. You can set it up to be renewable, so that your insurance policy and premium is renewed until you choose to cancel your policy, or you can set it up so that you only have to pay the premiums for a fixed length of time, after which you will still be covered.

No two critical illness policies are the same, and the main points of difference between policies tend to concern the definition of what a critical illness is, and what constitutes a diagnosis. While all policies are required by the Association of British Insurers (ABI) to cover certain common conditions, such as certain types of cancer and major heart attacks, the definition of how serious a condition has to be before the policyholder can make a claim vary from policy to policy, as does the list of other illnesses that are covered. At present, there are twenty three different critical illnesses listed in the ABI definitions. The majority of policies provide cover for over 30 different conditions, although some of the more comprehensive policies cover more than a hundred. For great deals on Critical Illness Cover, go to the Legal & General website.

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