Crit­i­cal pro­tec­tion for pa­tients


CRIT­I­CAL ILL­NESS in­surance is of­ten one of the most over­looked ar­eas of fi­nan­cial pro­tec­tion and, in 2015, a to­tal of more than £1.12 bil­lion was paid out in the UK alone re­sult­ing from 17,045 suc­cess­ful claims. More than 93 per cent of all crit­i­cal ill­ness claims were suc­cess­ful (source: As­so­ci­a­tion of Bri­tish In­sur­ers).

A life in­surance pol­icy is de­signed to fa­cil­i­tate the pro­vi­sion of a lump sum or reg­u­lar pay­ment, of­ten for the ben­e­fit of fam­ily or busi­ness as­so­ciates, upon death of the in­sured. In con­trast, crit­i­cal ill­ness in­surance can pro­vide fi­nan­cial sup­port sooner rather than later and at a time when it may be needed most.

Crit­i­cal ill­ness in­surance pays out a tax-free lump sum if the in­sured is di­ag­nosed with a crit­i­cal ill­ness as de­fined by the terms of the pol­icy. It can there­fore act as a most help­ful fi­nan­cial cush­ion if the in­sured has to stop or re­duce their work or other ac­tiv­i­ties, for a short pe­riod of time or in­deed in­def­i­nitely, just at a time when ad­di­tional ex­penses re­sult­ing from the ill­ness of­ten oc­cur.

Ill­nesses de­fined as “crit­i­cal” vary from one provider to an­other, so it is im­por­tant to check the terms of the pol­icy care­fully to de­ter­mine what is cov­ered. Gen­er­ally, a crit­i­cal ill­ness is de­fined as one that re­sults in a per­ma­nent change to your body, abil­iof ties or life­style, such as heart at­tack, cancer, stroke, de­men­tia, loss of limbs and blind­ness. In ad­di­tion to “core ill­nesses” de­fined by the ABI, many providers cover a con­sid­er­able num­ber of ad­di­tional con­di­tions, some of which pay out the full sum as­sured and oth­ers, ar­guably less se­vere, pay out a lower sum.

It is pos­si­ble that the in­surer may re­strict or ex­clude cer­tain dis­or­ders if there is a fam­ily his­tory or pre­ex­ist­ing con­di­tion or pre­mi­ums may be ad­justed to ref lect the higher risk of claim. In ad­di­tion, the terms of a pol­icy will out­line the de­gree of sever­ity of a con­di­tion in or­der to pay out; for ex­am­ple, the early stages com­mon can­cers, par­tic­u­larly if en­cap­su­lated, may not be el­i­gi­ble for an im­me­di­ate claim.

Crit­i­cal ill­ness cover can be a stand­alone pol­icy or bolted on to a life in­surance pol­icy. Like all forms of in­surance, one hopes a claim will never have to be made but it is sen­si­ble to be pre­pared. One never knows what life has in store. Crit­i­cal ill­ness in­surance should there­fore, at the very least, be con­sid­ered as a key com­po­nent of fi­nan­cial pro­tec­tion for fam­ily and busi­ness alike.

Gra­ham Men­doza-Wolf­son is a se­nior con­sul­tant with NLP Fi­nan­cial Man­age­ment, 020 7472 5555, gra­ham. men­doza-wolf­

Do not let fi­nances be a ca­su­alty of se­ri­ous ill­ness

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