Critical Illness Cover Guide

Everyone likes to think of themselves as invincible and is usually of the opinion that ‘it will never happen to me’ and that they are never going to get ill. It is very easy to put the thought of anything ever happening to us to the back of our minds. 

We are all aware of the statistics and facts online, on the television and in the newspapers, yet often we chose to disregard them or commonly show no interest in these figures. You have probably heard that 1 in 3 people suffer from cancer or that every five minutes someone suffers a stroke. These are not particularly good odds for any of us.

As morbid as it sounds, imagine that you are that 1 in 3 or that in the next five minutes it is you who suffers a stroke.

How would you cope? Who will pay your mortgage if you are unable to work due to sickness? Where is the money going to come from to pay for your treatment?

A critical illness plan can cover all of these things and more if you are ever to find yourself in that terrible situation. The critical illness plan gives you options when it looked like you had none.

What is Critical Illness Cover?

Critical illness insurance is a long term insurance policy designed to pay out a lump sum or income on the diagnosis of certain life threatening or debilitating (but not fatal) conditions, such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs.

Once a successful claim has been paid by the insurer, it is at your discretion to use your money as you see fit. This could be to pay off your mortgage, cover your bills while you are off work, protect your family or pay to have private treatment. The money is yours and it is completely up to you what you decide to spend it on. In some cases the money could be used to change your home to suit your new circumstances if needed, such as adding a wheelchair ramp. The choice is down to you and your own personal circumstances. 

It is usually cheaper to take out life and critical illness cover than critical illness on its own. Critical illness cover is more expensive than life cover on its own as you are up to seven times more likely to claim on a critical illness policy. The good news is that a critical illness policy does not cost seven times the amount but still works out more cost effective to take out a life and critical illness policy.

Do you have to have the same amount of Life Cover as Critical Illness Cover?

The answer to this is no. Just as with an individual life insurance policy and separate critical illness policy, you can choose the amount of life cover and critical illness cover to suit your circumstances and budget. For example, you could have £100,000 of life cover and a one year’s worth of critical illness cover of £20,000. This can bring the cost of the premium down as opposed to having £100,000 of life and critical illness cover which would be more expensive.

What should I know about Critical Illness Cover?

From insurance company to insurance company, critical illness cover is very different in the case of each provider. Each company will have their own definition of what their critical illness plan will entail and will pride themselves on offering something unique to the rest of the providers in the insurance market.

Often the cheapest plan on the insurance market is rarely the best plan to apply for however neither is the most expensive necessarily, it all comes down to what you want from your plan. With the numerous amount of insurance companies available there may be, if required, one that is most suited to any medical conditions you may have that are more lenient when there is a family history of diabetes for example or if you wanted to ensure that all types of heart attacks are covered as they run in your family you might be better suited to another insurance company. It is our job at Proadvice to know which insurance provider is best suited to your individual circumstances.

As you can probably imagine, all insurance companies will cover you for cancer. For the insurance company to be able to call your illness plan critical illness, the ABI demands that the insurance company must cover cancer. However what you may not know is the two most common types of cancer, are lower grade prostate cancer (for men) and (not all) breast cancers (most common for women) are not covered by all insurance companies.

Due to medical advancements and early diagnosis in illnesses, many people are relieved that the cancer is caught early enough and, after treatment, can get on with living their lives. It also means that their critical illness plan would not pay out, even though they may need a long time off work.

There are insurance companies in the insurance market that do cover breast and prostate cancer and it is these small differences that can make a difference to whether you are entitled to a claim or not. Your Proadvice adviser can assist you with this and point you in the right direction.

Another condition which often causes confusion in respect of critical illness cover is a heart attack. The definition of a heart attack, according to the ABI is as follows:

‘Death of heart muscle, due to inadequate blood supply, that has resulted in all of the following:

• Typical clinical symptoms (for example, characteristic chest pain).

• New characteristic electrocardiographic changes.

• The characteristic rise of cardiac enzymes or Troponins recorded at the following levels or higher;

         – Troponin T > 1.0 ng/ml

         – AccuTnI > 0.5 ng/ml or equivalent threshold with other Troponin T methods.

The evidence must show a definite acute myocardial infarction.’

Much of the information may come across as confusing or medical jargon but there is one sentence that catches the attention of most people and that is that there has to be chest pain. It seems to make sense that chest pains and heart attacks are closely linked, however how many times have you heard of someone having a heart attack and they get no chest pain, or the pain is in their arm? If you haven’t noticed, try watching any medical soap for long enough and you will see a character suffer with a heart attack and get shooting pains in their left arm before collapsing. 

About a quarter of all heart attacks are known as silent heart attacks and this is where the pain, rather than being in the chest is elsewhere around the body, most commonly being a shooting pain down your left arm. A silent heart attack is where part of your heart has died and you will have to live with this condition for the rest of your life, but because you never experienced any pain in your chest, you would not be entitled to get a pay-out from certain insurance companies on your critical illness cover, even though a silent heart attack is just as deadly as a ‘normal heart attack.’ In fact, twice as many people will die from a silent heart attack as any other heart attack.

Many insurance companies use the Association British Assurers ABI+ definition which will cover silent heart attacks but it is important to find out who these providers are if it is something you want to be sure is covered. A Proadvice adviser can assist you with this. 

The ABI definitions are spread across all conditions from cancer to a stroke and loss of limbs. Many insurers have embraced the ABI and gone beyond the standard definitions. Proadvice can again assist you with the small print so you can be reassured that you are applying for the right policy for you.

There are some critical illness definitions that can expire as you get older - an example of this is diabetes. If you are diagnosed with Type 1 diabetes before the age of 40 then some insurance providers will pay out the full sum assured on your critical illness cover. The benefit however stops at the age of 40 so when you reach your 41st birthday you are no longer able to claim for type 1 diabetes.

There have been several studies and debates on what is classed as a total permanent disability over time within the insurance industry and with trying to make the definition clearer to the general public. By giving the public a greater understanding of what in included within the insurance policy, it is hoped that the claims declined statistics are reduced significantly and that more people will be able to add the TPD to their critical illness plan. This will also mean that all the insurers will have the same standard definition for total permanent disability.

Claims statistics can vary from one insurance company to another and also how the insurance companies record the claims that come in can differ too.

Some insurance companies will add up all of their claims that come in, even ones that are not for critical illness such as baldness and bad back will be included in the figures. These claims are recorded as non pay-outs despite the fact that the client was never covered for the conditions in the first place. 

Other insurance companies may also include claims that come in for conditions that were originally excluded from a policy, for example if the client had breast cancer exclusion and tried to claim on it then it would be recorded as a legitimate claim.

Now other insurance company’s record claims may be calculated very differently as they might only record claims that come in for conditions that they actually cover such as cancer and heart attack.

Currently, critical illness insurers claim statistics are at around a 90-95% pay-out which is great news for consumers. (1) In fact, they are now at their highest ever level. As there are no standard controlled variables between insurance companies it is important to speak to a Proadvice adviser when looking at insurers claim statistics.  You should never take out an insurance company’s critical illness plan based on their claims statistics alone. You need to be well informed on their small print, their rules, the get out clauses involved and what extras there are included in the plan. All of this should also be taken into consideration before applying for an insurance policy. Your Proadvice adviser can assist you and point you in the right direction. 

1. https://www.abi.org.uk/News/News-releases/2013/05/Insurers-pay-out-6-million-every-day-to-help-families-deal-with-death-serious-illness-or-injury

How to claim on critical illness?

Each insurance company’s critical illness plan varies and they can cover you from as little as 4 conditions, right up to 160 conditions. It is vital that before taking out a critical illness plan that you read all of the terms and conditions that apply and are happy with the content detailed on the Key Features Document that you will receive. Your Proadvice financial adviser can also talk you through these documents so that you can have complete confidence in your policy.

If you are unlucky enough to become critically ill, you will need to contact the insurance company that you hold your insurance policy with. Usually you are required to survive for 14 days before a claim can be considered valid. Your insurance company will send you out a claim form so that they can gather the information from your GP and assess whether your claim is valid.

In cases where a claim is not valid, it is often due to 3 common factors:

The first is non-disclosure; if you have not told your insurance provider about a pre-existing medical issue no matter how long ago it was, it may be reason enough for an insurer to not pay out, for example, if you had a heart attack 20 years ago you will still need to inform your insurance provider regardless of whether you have made a full recovery. You are also required to tell the insurance company about any dangerous sports you participate in, such as off piste skiing or free climbing, any dangerous working conditions such as working at heights for example or if you work abroad. Oil rig workers in Nigeria are going to be a more significant risk than an office worker in Northampton. The insurance companies can still offer you the cover but the disclosures will affect the underwriting of the policy.

Another reason a claim will not pay out is if the illness you have does not match the definition of a critical illness. For a claim to be valid you have to meet the definition set out in your Key Features Document. An example of this is with skin cancer. Skin cancer is covered under a critical illness contract however many types of skin cancers are treated in the very early stages and due to the usually early diagnosis and non-intensive surgery, in many cases the skin cancer can be of less concern than a more intrusive illness.

In some cases treating skin cancer can be as straight forward as a day visit to hospital, the cancer is removed and you are cured. This is not considered a critical condition even though you have in reality had cancer. If the condition were to worsen it might then meet the definition outlined in your policy and therefore the plan will pay out. Another common reason for a non-payment is if your plan has a standard exclusion. A standard exclusion that is quite common is suicide or if you have contracted HIV through drug abuse. There are however many plans you can take out with no exclusions in place at all. Your Proadvice financial adviser will be able to talk you through the differences between the plans and work with you to establish which one is the most suitable for you.

On a pay-out of a successful claim, the insurance company will send you the money by cheque. The insurance industry is an industry which does want to pay out. If you are facing a situation where you may need to claim or are in the process of doing so, please do not hesitate to call Proadvice and we can help to support you through it and even speak to your insurance company on your behalf if it was something that you wanted us to do. Many insurance companies also offer extra benefits and emotional support with trained professionals, should you find yourself in a position where you need to make a claim.

2.https://www.abi.org.uk/

Does Critical Illness pay out?

Last year critical illness cover had its best year ever on the basis that more claims were paid out across the UK than any year ever before. This is down to improved enhancements of the illness and definitions in the policy, and a clear, medical understanding which has kept in trend with medical advancements. Insurers often employ Doctors and other medical professionals to help them to build and design their policies. This means they can now cover and understand more about the illnesses people face every day. 

According to the Association of British Insurers (ABI), the average pay-out on a critical illness policy in 2010 was £47,166.  In 2011 across the whole insurance market critical illness claims were at 91% this is a huge rise from 2005 where it stood at 80%. This is partly due to the success of the Association of British Insurers (ABI) and the Code of Practice on non-disclosure which means that insurers now share information to ensure claims are valid. This Code of Practice has resulted in a marked reduction in claims having to be declined due to customers not sharing important medical information with their insurance company.

Moving forward the ABI also has redefined the Total Permanent Disability (TPD) definition, making it much clearer to the client and the insurance companies what will count as a claimable condition. This means if you suffer a disability, all of the insurance companies will offer the same standard definition for a claim. This also means that all of the insurers have the same standard definition in relation to total permanent disability.

Are my Children covered with critical illness cover?

Many critical illness plans do cover children. Children are usually covered by critical illness plans from the age of 3 months until they reach 18 years old. Recently some insurance companies have had a rethink in relation to their policy and decided to offer cover for your child from birth to the age of 23 if they remain in full time education.

No-one will ever like to think of their child suffering from an illness but did you know that every 30 minutes, a child or young person will acquire a brain injury and that every year in the UK (3), around 1,500 new cases of childhood cancer are diagnosed? (4) These are heart breaking statistics.

3.  http://childbraininjurytrust.org.uk

4.  http://info.cancerresearchuk.org/cancerstats/childhoodcancer/incidence/index.htm

All of the conditions that you are covered for on your critical illness cover will usually also apply to your child or children, whether they are birth or adoptive children. The critical illness plan is designed to pay a lump sum separate from the sum assured you agreed for your critical illness plan which will give you a lump sum to help look after your child but will have no effect on your own original sum assured.

You can use this pay-out in any way you see fit, whether it may be for private treatment for your child or to take time out of work to spend with your children or take the family on a once in a lifetime holiday. The choice is completely yours. The plan will only normally pay out once per child and some insurance companies will stop any pay-outs after two claims if you are unfortunate enough to have two ill children.

If you and your partner both have your own single insurance policies and your child is ill you could possibly both claim and receive two pay-outs, one from each policy.

The insurance companies are completely aware that if your child is ever sick you would rather be by their side than be at work making sure that you are able to still meet your mortgage repayments. The children’s critical illness cover allows you to do this as by knowing that all the bills and repayments are covered you can be at your child’s side while they receive treatment and be there for them throughout and help them on their way to recovery.

The idea behind the plan is to take away the money stress and allow you to focus on what is really important. 

Some insurance companies offer additional benefits in their children’s critical illness cover such as;

  • Accident Hospitalisation Benefit

    The insurance company will pay out if a child is admitted to hospital with physical injuries for a minimum of 28 consecutive days immediately following an accident.

  • Childcare Benefit

    If you claim on your critical illness plan and you have a child, the insurance company could pay for childcare so that you can concentrate on your recovery.

  • Family Accommodation Benefit

    For every night a child spends in hospital, the insurance company can pay for your accommodation so that you can be near your child.

  • Child Funeral Benefit

    On the death of a child, the insurance company will contribute towards their funeral.

What is buy back Critical Illness Cover?

How many times have you heard of someone beating cancer or another critical illness only for it to return? Now if you have a critical illness plan you will normally only get a pay-out when you are first diagnosed but there is an option to add ‘buy back’ on to your plan, which means should you suffer a second critical illness the cover will pay out again. This option varies from insurance company to insurance company but typical ways this can be done is as follows;

Life Cover Buy Back - Some insurance companies allow you to buy back the life element of your plan. If you have a life and critical illness plan and claim on the critical illness part of your policy, you would normally lose your life cover as well.  By selecting the buyback option, your life cover will be reinstated. 

Reinstatement Cover - After claiming on your critical illness cover if you have reinstatement cover this means that your plan will be reset. How this is done depends on which insurance company you decide to go with, for example, one insurance company will give you the exact same critical illness you had before and another may exclude the condition you claimed on, while others will limit the conditions you can claim on. The best buy back option will top your cover back up to 100% of the original sum assured and will pay out up to 300% of the original sum assured, no matter what the condition is but you will pay a higher premium for this privilege. 

Please note that you can only add buy back onto your plan before you start the plan.

How will I know which Critical Illness Cover plan is right for me?

A critical illness plan is a great way of protecting you and your family should the worst happen. It is vitally important that you speak to a Proadvice financial adviser when it comes to choosing the correct policy for you. A Proadvice adviser can assist you with each aspect of your insurance policy and can explain the difference between the conditions covered by each insurance company so that you know not only what is covered by your policy but just as importantly, the conditions that are not covered. There are a number of key factors that are required to make a worthy critical illness plan, such as claims, conditions and ABI+ but more importantly that the plan has what you want included in it. If the conditions you are concerned about are covered then it is the right plan for you. Everyone is different and has different concerns and that is one reason as to why there is so much choice.

Is Critical Illness cover too expensive?

In real terms, critical illness cover is actually reducing in cost. For many people critical illness insurance will never be any cheaper for them than it is today as the longer you delay getting your insurance, the more you will have to pay. It is in your interest to speak to one of our experienced Proadvice advisers today. 

Number of conditions

Critical illness cover turned 30 this year. Critical illness cover has developed in many forms over the years but the aim is still the same. Critical illness cover pays out a lump sum in the event of you suffering from a life changing illness such as a heart attack, cancer or stroke. Thirty years ago it was 4 conditions that were covered by a critical illness policy and now there are around 40 conditions covered and even a policy that covers 160 conditions. Many critical illness plans have partial pay-outs for less serious conditions, for example the early stages of cancer.

You will also need to make sure the most common conditions are covered, for example, what is the benefit of covering numerous, rare conditions if the most common type of cancer is not covered? 1 in 3 people will suffer from cancer in their life time so it makes absolute sense to ensure that cancer is covered in your plan.

The number of conditions covered by the critical illness plan does not necessarily make the plan the best plan available on the market. There are a number of other factors that should be taken into consideration such as the amount of ABI+s covered and extra benefits like Best Doctors, Red ARC or Care Line.

The ABI

The ABI, Association of British Insurance was formed in 1985 and speaks on behalf of all UK insurance companies. Their membership has over 300 members and cover 90% of the UK market. On average the ABI members, (the insurance providers) pay out £192 million every day. In protection alone there was £6 million paid out every day in life insurance, income protection and income protection (5).

5.  https://www.abi.org.uk/News/News-releases/2013/05/Insurers-pay-out-6-million-every-day-to-help-families-deal-with-death-serious-illness-or-injury

The ABI’s aim is to promote best practice, transparency and high standards within the insurance industry. One of the ways they do this is to set the definitions of critical illness so there is a measurable way of comparing policies. Thanks to the ABI in 2012 there were;

  • 98% of life insurance claims paid
  • 92% of income protection claims paid
  • 91% of critical illness claims paid

The ABI+

The ABI+ is when an insurance company goes above and beyond the standard critical illness definition. Here is an example of some ABI + definitions.

  • With ABI + there is no need to demonstrate typical symptoms, for example chest pain during a heart attack as the claimant could have suffered a ‘silent heart attack’. With a standard ABI definition the person would have to have suffered chest pain during the heart attack for the insurance provider to pay out on the policy.
  • Loss of a single hand or single foot would be covered in an ABI+. A standard ABI would need to be the loss of two, in order for the policy to pay out.
  • Some insurance companies will not pay out if you suffer from a stroke caused by the result of a traumatic head injury. With ABI+ this would be covered.

What is Best Doctors?

If you are ever diagnosed with a medical condition, Best Doctors provides an in-depth review of your medical files to help confirm your diagnosis and to recommend a treatment plan. These days even the most skilled medical practitioners, doctors and surgeons alike, recognise the value of a second opinion. Best Doctors allows you to take advantage of the very best medical advice available. Best Doctors have a listing of more than 53,000 doctors listed on their database. 

Once Best Doctors have collated your medical information, they will select the most appropriate expert from their database, who will review your case in detail. Following this, a full report will be sent to you. This will contain their evaluation of your condition and their expert opinion on the treatment options that could be open to you as well as answers to any additional questions you may have about your condition. Best Doctors can allow you to have treatment on the NHS locally for free, helping you to avoid the postcode lottery. The post code lottery is where the area you live in determines what medical treatment may be available to you. Should you decide to use the recommendation from Best Doctors you can pay to go and have treatment with the world’s experts. Best Doctors can help arrange flights, accommodation and the meeting with your Doctor on your behalf.

What is Red ARC?

RED ARC is an advisory service that provides a range of health care services.  The aim of the RED ARC service is to provide tailored support to meet client’s needs after being diagnosed with a serious medical condition. RED ARC provides a helping hand for the client and their family.

What is the Member Careline?

The Member Care Line is a free benefit for all holders of a policy with LV (Liverpool Victoria). The Member Care Line offers confidential advice on day to day problems and is available 24 hours a day, 365 days a year and can give you free advice on;

  • criminal and civil law queries
  • health and medical questions
  • finding a reliable tradesman in an emergency
  • questions about tax
  • advice and counselling

Should I get Advice?

There are over a hundred different types of life cover policies available on the insurance market and trying to find the right plan to suit you can be extremely daunting. The good news is Proadvice are here to help relieve the pressure and find you the right policy. Proadvice offer fee free independent advice with no obligation. Our price guarantee will ensure you will know that we have obtained the right policy for you and also at the right price. 

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