Critical illness or ‘Dread disease’ cover plans are growing in popularity as medical science and technology today can save lives far more readily than thirty years ago, when cancers and strokes were virtual death sentences.

Traditional life insurance pays out on death, not if you survive but are physically or mentally impaired. PHI and disability insurance pay out only if you are unable to work as a result of your illness or disability.

Critical illness insurance policies are different in that they cover an individual for life or for a set period against a number of serious illnesses, diseases and medical conditions. It pays out a single tax-free lump sum on the diagnosis of one of the illnesses specified in the policy details. Diagnosis alone of one of the specified illnesses is sufficient to trigger payment. There is no requirement for loss of earnings or even for special medical treatment.

• The term and sum to be insured are decided at the outset.
• If a critical Illness is diagnosed during the specified term then the sum insured is paid out. Normally you must survive a period of 28 days following the diagnosis of the illness, in order for the policy to pay out.
• If you have not suffered any serious illness at the end of the term then the plan ceases and nothing is paid out.
• The plan can be set up on a single or joint life basis and can be added to either level term or mortgage protection assurance. If the critical illness cover is combined with life assurance and you contract a critical illness for which you make a claim, you may lose the life cover benefit.
• In most cases these products are non-regulated. However should your chosen product fall into a regulated category we will advise you accordingly.

Before making any decisions on critical illness cover, there are a number of factors to consider. How much money would you need if you did become critically ill and for how long would you need the cover? You also have to consider the various illnesses that are covered by different insurance companies and any conditions that apply.

Critical illness
Illnesses covered
Cost of cover
Benefits