Should I Choose Critical OR Serious Illness Cover?Written on May 31, 2013 by Kirk Rice LLP
Financial Services QuestionsThe Question:
Kirk Rice LLP answers:
Miss C.G. Asks:
I was advised to take out Critical Illness a few years ago but at the time the cost was too high. A friend has recently been diagnosed with Cancer and it has made me realise that Critical Illness would be good to have but does Critical Illness Cover vary much between companies or should I just compare the cost?
Peter Sharratt Answers:
The Critical Illnesses covered and definition of what constitutes a valid Critical Illness will vary between providers so you cannot look at cost alone; you have to look at the quality of cover. The ABI (Association of British Insurers) does, however, set a Definition Standard for each Critical Illness which Insurers should conform to and in some cases they will actually better it. Understanding what is and is not covered is important as Critical Illness claims are based on you being diagnosed as suffering from one of the serious illnesses (heart attack, cancer, stroke etc) covered by the policy.
Each illness will have an expected level of severity before a claim can be paid. As an example a Critical Illness policy will typically cover Blindness. But for it to be a valid claim it must be Permanent & Irreversible AND ‘when tested with vision aids, vision is measured at 3/60 or worse in the better eye using a Snellen eye chart’. Basically you need to be blind in both eyes. You can lose an eye and lead a very normal life but if you had a Critical Illness policy and did lose your sight in one eye you might feel a bit aggrieved when it did not constitute a valid claim. This does highlight the importance of understanding what is and is not covered.
Pruprotect offer a variation on the traditional Critical Illness Policy which they call their Serious Illness Cover. They pay claims based on severity and taking my earlier Blindness example they would actually pay out 15% of the Sum Assured if you lost the sight in one eye (permanent & irreversible). As a further example if you had a surgical repair of a Detached Retina they would pay 10% of the Sum Assured and the Full Sum Assured would be paid for Total Blindness as it would for a Traditional Critical Illness. If you had a partial claim, the remaining Sum Assured is still available to be paid if you suffer from another Serious Illness. At a total of 161, Pruprotect also cover far more Illnesses and Conditions than a Critical Illness Policy which will typically cover 39 Illnesses and Conditions.
If you would like more advice regarding this issue or any other financial services matter, please contact us.
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