Critical illness cover - Part I

What is it?
Critical illness cover or commonly abbreviated as CIC pays out a fixed lump sum amount of money if you are diagnosed with certain illnesses which fall under the critical illness category.. The illnesses covered will be specified in the policy along with any exclusions, at the time when your are buying this policy. These exclusions differ from one insurer to the other, so please make sure you know what you are paying for. CIC policies generally only pay out only once in a lump sum amount, so they are not a replacement for income.

Who should buy it?
You have taken a mortgage loan, and have a financial commitment to repay the loan for the coming few years. Now you are afraid that you may get a critical illness due to which you may not be able to work and get your income. Then how will you manage to repay your mortgage loan? That’s when the CIC policy insurance helps. Many people buy CIC when they take on a major commitment such as a mortgage. This is something you must discuss with a mortgage adviser.
Even otherwise if you don’t have a financial obligation, you can buy CIC insurance policy:
• through a financial adviser, who advises on CIC, taking account of your wider financial circumstances; or
• directly from insurance companies over the telephone or internet.
Not all firms can and are eligible to give you advice about whether CIC is suitable for an individual. They should clearly tell you whether they will be offering advisory services and recommending a policy, or giving you information only. If they only give information, you will need to consider the information they give you and make your own decision as to whether the product is right for your requirements.


What are the main features?
Before you take out cover, here are some things to consider:
• Critical illness cover pays you a lump sum if you are identified as a patient suffering from one of the illnesses specified and covered in the policy terms.
• Policy summaries will often have a list of sicknesses covered, but this is only a guide and full details will be in the policy document. This will also set out the eligibility criteria that have to be met before the insurer will pay a claim.
• As an example, in the case of deadly disease like cancer, not all kinds of cancers or all stages of the cancer are covered. For heart attacks, the insurer will need to know the pre-existing medical proof of the severity of the heart condition before paying a claim.
• CIC does not cover simply any sickness that affects your ability to work – it is specific about which illnesses are covered. Usually, the more sickness or diseases you want to be covered, the more costly the policy will become.
• Some insurers exclude all pre–existing sickness conditions but others will decide on the basis of your personal medical history.
• CIC differs to other types of protection insurance such as income protection or payment protection, so make sure you understand what it does and whether it is right for you.
• Before you buy the insurance cover, the firm should give you either a Policy Summary or Key Features document. This will set out the key features and benefits, as well as any significant or unusual exclusions. If you have any queries about these you should ask the salesperson to explain the cover in more detail.
• Many insurers now provide a plain English guide to the illnesses covered. Ask the salesperson if they have one that explains the policy they have recommended.
• If the insurer imposes any other conditions, perhaps because of your own or family medical history, you should be told what they are before you take out the policy.
• Detailed policy terms and conditions will be provided in the policy document the insurer will send you after you take out the cover – make sure you read it so that you know what you're covered for.

Continue to Part II of this article