Death risk: Why you should avoid hospitals on weekends
03 Feb 2012
Health Insurance > Types > Critical Illness Insurance
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Critical Illness Insurance
Critical illness insurance will pay you a tax-free sum if you're diagnosed with a critical illness. Critical illness insurance cover is one form of protection designed to provide you with financial security in the event of you being diagnosed with a serious illness.
This type of insurance policy has been controversial in recent years, hitting the headlines for all the wrong reasons.
The Financial Services Authority has been cleaning up the industry, making critical illness insurance clearer and safer for the consumer. As in all insurance types, the more you know about a policy and the more open you are when applying, the better your choice will be. Exactly what you'll be covered for will be included on a critical illness list that you should read carefully before signing up to the policy.
The industry has also been coming clean about the number of claims it settles recently with many providers publishing statistics annually or even every six months in some cases.
What kind of illnesses are covered by critical illness insurance?
Each insurance company will have a list of policies that its critical illness insurance covers. Generally, these include things like cancer, heart attack, organ transplant, kidney failure, stroke, multiple sclerosis, and coronary artery bypass. A number of other illnesses may be covered, such as brain tumour, motor neurone disease, Parkinson’s disease, etc. If it's not on the list, you won't be covered.
What does the lump sum paid out by critical illness insurance cover do?
The way in which you, the policyholder, spend the sum provided by the insurance company is entirely up to you. You may choose to spend the money on private medical treatment, or you may prefer to spoil yourself or pay off some of your mortgage.
However, you should remember that critical illness cover is not private medical insurance. PMI covers acute illnesses (curable illnesses), whereas critical illness cover pays out if you're diagnosed with a critical illness which is life threatening.
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