Critical Illness
Insurance that pays out when a defined medical event occurs. For example, following a heart attack, stroke, cancer or some other specifically defined critical illness.
It could happen to anyone…
Cover is for a set term, which may be equal to a mortgage term, for when children have grown up, until retirement or another life stage milestone. It may be worth considering having one policy for a set term to cover the mortgage, and another that will provide money to help provide for your different lifestyle if a serious illness happens.
Most people choose a lump sum to be paid out. There is the option of receiving it as set income over the term remaining, which is often a lower cost option.
If the policy has no investment element then it will have no cash in value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse. The policy may not cover all the definitions of a critical illness. For definitions please refer to the key features and policy document.
The value of the investment can go down as well as up and you may not get back as much as you put in.
Frequently asked questions
- Am I guaranteed to get cover?
No. Critical illness cover depends on your health at the time of application. You will need to provide medical history information. Some providers will increase their premium (known as loading), exclude certain conditions, or even decline covering you at all.
- Can I make more than one claim during the term of the policy?
Usually not. The policy usually ceases once a claim has been made. There are policies out there that pay out on severity and allow multiple claims with a combined total value of the sum assured.
- Will this type of insurance pay out if I am unable to work?
This type of policy is not designed to cover your income. It will pay out on diagnosis of a defined critical illness detailed in the policy conditions and does not depend on your ability to work. To cover your income due to illness, income protection may be a better option as it covers a wider variety of illnesses including those less severe than those defined in a critical illness policy.
- When a claim is awarded, is it taxable?
No. The lump sum is paid out completely free of tax.
