Money Minder UK

Critical Illness

Have you considered what financial position you might find yourself in if you or a member of your family were to fall seriously ill?

Would you have any outstanding debts that would still need paying for?

Would you like to ensure that you had enough capital available to pay off all your outstanding debts?

Would you like to ensure that there is sufficient capital available to pay for adaptions to your car or home if needed?

Would you like to have capital available to pay for specialist private medical care if it were available?

If the answer to any or all of these questions is yes but at present you do not have a large amount of savings to call on in the event of yourself or a member of your family being diagnosed with a critical illness to achieve these goals, critical illness insurance is worth investigating further.

If you're critically ill, the last thing you'll want to worry about is your finances. It will be much better to concentrate on what you need to do to get better rather than have to worry about how you might afford to pay your mortgage whilst you are undergoing treatment for your illness. Critical illness cover aims to give you peace of mind in these circumstances.

As well as using this fact centre to guide you through the critical illness insurance buying process step-by-step, you can also use our industry exclusive critical illness insurance finance navigator to establish and resolve your own critical illness insurance needs easily and simply.

Our philosophy online is the same as the philosophy that has helped us to build long term successful relationships with our face to face clients - we are not here to tell you what to do, we are here to help you to understand all of the pros and cons of the different solutions available to you so that you can make an informed buying decision for yourself.

Critical illness cover (CIC) is designed to provide a lump sum in order to help you to maintain your financial security in the event you are diagnosed with a critical illness.

The tax free lump sum paid out is normally used to help with the cost of recovery or adjustments that might be needed to help you to adapt financially. For example, you might use the payment for private medical treatment, to pay-off your mortgage, or to make alterations to your home. Ultimately, you decide what to spend the money on.

Critical illness insurance policies usually only pay out once, so are not a replacement for income. If you're interested in finding out more about specifically protecting your income then you should go to our Income Protection Fact Centre.

If you're not sure about how much critical illness insurance you might need for your current situation, you can use our interactive online research tool, the Finance Navigator.

Critical illness cover (CIC), as with all insurance, is designed to help protect against unpredictable events that are often out of your own control.

People with financial dependents or those that would be faced with some sort of financial hardship if they were to be diagnosed with a critical illness take out critical illness cover to provide themselves and their family with a financial safety net if that were to happen.

Many people buy critical illness insurance when they take on a mortgage to help provide them with the peace of mind of knowing that if they were unexpectedly diagnosed with a critical illness, subject to a valid claim, the lump sum paid out could be used to pay off their mortgage.

People that would like to ensure that financial commitments such as credit card debts or a personal loan would be paid off in the event of being diagnosed with a critical illness also find critical illness insurance an appropriate solution to their needs.

If you'd like to establish your own critical illness needs, you can make use of our industry exclusive Finance Navigator.

You will probably already know lots of people that have been diagnosed with a critical illness at some stage in their lives, often while they are still of working age. For this reason critical illness insurance is a good idea.

The first question you need to ask yourself when thinking about whether or not you need critical illness cover is 'would you have had enough savings in the bank to pay off all of your outstanding debts and to cope with any extra capital costs that you might incur had you been diagnosed with a critical illness yesterday?'

If the answer is no, critical illness insurance is likely to be a good idea for you.

In the event of you or your partner falling seriously ill, some of the capital expenses you might have to contend with could include:

  • repaying your outstanding mortgage debt
  • paying off your credit cards
  • Paying off any outstanding personal loans
  • Paying off a car loan
  • making modifications to your house
  • private medical care not covered by a specific private medical plan
  • specialist treatment or perhaps even an operation that is only available in another country

And all of these costs would be on top of your normal daily living expenses.

Without the right financial provision, being diagnosed with a critical illness could be financially disastrous for you and your family at a time when you would have much to deal with already.

Relying solely on state benefits could prove dangerous as these are designed as little more than a safety net.

If you believe that you would be able to cover all of the potential capital costs that you might incur if diagnosed with a critical illness out of your existing savings, then critical illness insurance may be unnecessary. However, if you have any doubt, you should explore this type of cover further.

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.

One of the most important features of Critical Illness to bear in mind is it pays a lump sum in the event you fall unexpectedly and seriously unwell - if you are looking for an income in the event you need to claim you should research Income Protection in our Fact Centre.

Critical illness cover is like all other insurance - you pay your premiums which provides you with an agreed level of cover, then if you need to make a claim that meet's the agreed criteria, you receive a payment.

One of the crucial features of critical illness insurance is that you will only receive a payout if the insured life is diagnosed with a critical illness that is specified on the providers a list and their own definition criteria has been met.

The amount you pay for your critical illness insurance will be based on the information that you give the insurance company when you apply for the plan.

The premium you will need to pay will be based on a variety of factors which usually includes the level of cover required, how long you want that cover to be in place for, your age, your occupation, gender, and whether or not you smoke.

So if you're a sky-diving middle aged smoker whose day job involves working with machinery and you want a high level of cover, you're likely to pay a lot more than a 20-year-old non-smoking athlete who works in an office and wants only a small amount of cover.

It's worth bearing these factors in mind when you start looking for a provider - it's worth trying to avoid just taking the first or cheapest policy you find and shopping around as we all know that the cheapest is not always the best!

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.

Different critical illness protection providers covers a range of different critical illnesses. It is important to consider what illnesses a provider covers before you start a new plan with them.

Click here to see a list of illness covered by each provider. This link is a PDF file that has an up-to-date table of each provider and the illnesses that they cover. If you are having problems viewing the file, please make sure you have a PDF reader on your computer (such as Adobe PDF or Foxit PDF).

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.

As you would expect, different companies charge different amounts for investing in their investment bonds. The actual charges you end up paying will also depend on how you choose to invest and whether or not you are comfortable to choose your own investment bond from the whole option for you might be.

What about advice costs?

If you decide to get some advice, first, make sure you speak to an independent financial adviser. You will also need to have an open and frank conversation with your adviser about how you would prefer him or her to be paid for the advice you are being given. Please remember that commission based advice is NOT free advice, it just means that the commission being paid to your adviser is already built in to the charging structure of the product you are investing in. In many cases, fee based advice can provide better value because if you choose to deal with an adviser on a fee basis, any commission that would have otherwise been payable to the adviser is used to enhance the terms of the investment you are making.

Charging structures on investment bonds

The most common types of charging structures seen on investment bonds include:

  • An initial charge - you pay an initial charge when you invest your money. This has the effect of reducing the amount available from day one, however, it is also very transparent and as such is the preferred method chosen by many professional investors.
  • An establishment charge - you don't pay an initial charge, instead the provider levy's a higher annual charge for the first 3 to 5 years of the investment. This has the effect of spreading the charges out over the first few years you invest. Bearing in mind you hope that your investment will go up in value, it also means that the amount you pay overall could be far higher than it would have been had you chosen the initial charge option instead.
  • Tiered allocation rates - Alongside an initial or establishment charge, an allocation rate has the effect of reducing or increasing the amount of money used to buy units in the investment funds you choose to invest in.

    (As an example, an allocation rate of 98% means that for every �100 you invest, only �98 actually gets invested. Therefore it is, in effect, a 2% initial charge. If you are offered an allocation rate of more than 100%, do not be misled in to thinking that this means that you are making money on day one. There is likely to be an initial or establishment charge that will offset this higher allocation rate.)
  • Annual management charges - every year your fund manger and adviser have costs to meet themselves and these are normally met at source via an annual management charge. This is used to cover the cost of ongoing expenses such as the costs of fund management and administration.
  • Exit charges - when you decide to take out some or all of your money, you may incur a charge. This is most likely in the in the first 5 to 6 years but if you were to invest in to a 'with profits bond' this could happen at any time other than on pre determined dates.

Most critical illness insurance plans are covered by ABI Codes of Practice. You can get information on these codes from

In addition, the actual critical illness insurance plan providers (often large UK life insurance companies) are also regulated by the Financial Services Authority (FCA).

Below is an extract from the Chartered Institute of Insurers explaining how providers are accountable to this organisation.

More information can be found on the FCA website.

At present, critical illness insurance which is pure protection is regulated by the Financial Conduct Authority (FCA) under the Insurance: Conduct of Business Sourcebook. In some cases critical illness insurance is regulated under the stricter Conduct of Business Sourcebook. This applies where there is any investment element (for example, the policy is unit linked or with profits or includes surrender values or the policy term is whole of life).

The FCA is reviewing its rules and one possibility is that, at some future point, a stricter regime might apply to the selling of critical illness insurance and other protection policies. The argument for this is that such policies are -high risk- and there may be a serious likelihood of consumer detriment if they are not sold correctly. The FCA has accused some critical illness providers of scare-mongering and using misleading statements in promoting the cover. This is a complex issue: the FCA itself understated the risk of cancer in its bulletin and providers have to tread a careful line between informing people (the statistics themselves are scary but that is not a reason for people to be unaware of them) and over-complicating or using inappropriate data.

However, to date no firm proposals to change the regulatory regime have been put forward. If they are the industry is likely to lobby against such a move, especially as it is generally agreed that most people have insufficient cover (the -protection gap-) and that any move that may discourage intermediaries from selling protection products would be a retrograde step.

There is a core of major illnesses which tend to be covered by all providers including cancer, stroke, major organ transplant, coronary artery by-pass surgery, multiple sclerosis, heart attack and kidney failure.

Many providers cover 'additional conditions' which may include aorta graft surgery, benign brain tumour, blindness, coma, deafness, heart valve replacement or repair, loss of limbs, loss of speech, motor neurone disease, paralysis/paraplegia, Parkinson's disease, terminal illness and third degree burns.

The list of critical illnesses' covered by critical illness policies varies from provider to provider and will be specified in the policy along with any exclusions. You should never assume that a particular illness is listed. You should also check which type of critical illness cover (basic or comprehensive) you quote has been prepared on and which actual critical illnesses are covered before you commit to buying a specific providers plan.

Below is a comprehensive list of critical illnesses and definitions that you might expect to find within a providers own plan literature - source: Chartered Institute of Insurers

  • Alzheimer's disease [before age x] - resulting in permanent symptoms;
  • aorta graft surgery - for disease;
  • benign brain tumour - resulting in permanent symptoms;
  • blindness - permanent and irreversible;
  • cancer - excluding less advanced cases;
  • coma - resulting in permanent symptoms;
  • coronary artery by-pass grafts - with surgery to divide the breastbone;
  • deafness - permanent and irreversible;
  • heart attack - of specified severity;
  • heart valve replacement or repair - with surgery to divide the breastbone;
  • HIV infection - caught [in the UK] from a blood transfusion, a physical assault or at work in an eligible occupation;
  • kidney failure - requiring dialysis;
  • loss of speech - permanent and irreversible;
  • loss of hands or feet - permanent physical severance;
  • major organ transplant;
  • motor neurone disease [before age x] - resulting in permanent symptoms;
  • multiple sclerosis - with persisting symptoms;
  • paralysis of limbs - total and irreversible;
  • Parkinson's disease [before age x] - resulting in permanent symptoms;
  • stroke - resulting in permanent symptoms;
  • terminal illness;
  • third degree burns - covering 20% of the body's surface area;
  • traumatic head injury - resulting in permanent symptoms.

In addition, other critical illnesses may be covered, included under permanent and total disability, at least in their later stages:

  • angioplasty;
  • aplastic anaemia;
  • bacterial meningitis;
  • cardiomyopathy;
  • CJD;
  • diabetes mellitus from age 45;
  • Hodgkin's disease;
  • keyhole heart surgery;
  • liver failure;
  • loss of independent existence;
  • open heart surgery;
  • pre-senile dementia;
  • progressive supranuclear palsy;
  • pulmonary artery surgery;
  • rheumatoid arthritis;
  • severe lung disease.

It's worth bearing in mind that medical advances constantly change this list. New techniques and cures mean recovery times are being cut for conditions that used to be debilitating.

To research your CIC position further you can go to our online personal finance consultant, the Finance Navigator.

Many critical illness insurance plans now include something called total and permanent disability (TPD for short).

These are defined as illnesses and medical conditions where there is no long-term prospect of recovery and where the insured is totally disabled.

The difficulty lies in defining "total and permanent" disability because different providers use different criteria.

But as a general rule of thumb, providers usually assess a claim on the insured person's inability to perform tasks like the following:

  • their own job (own occupation)
  • similar jobs to their own or those they are trained or qualified to do (suited occupation)
  • any job (any occupation) - a lawyer would not be able to claim if he or she was able to work as a car park attendant
  • specified 'work activities' or 'activities of daily living' as tested by 'living' or 'functional ability' tests

Because of these definitions, changing your job might mean you have to at least tell your provider to ensure it remains valid.

To make sure the customer gets what they want many providers allow a choice of cover. This ranges from a limited number of conditions, (which is usually cheaper), to much more comprehensive packages.

The cost of putting 'comprehensive cover' including TPD will not necessarily be prohibitively more expensive than 'basic' cover.

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.

Because policies can vary so much from provider to provider you will find a range of age limits. However, most providers allow people to set up critically illness cover plans between the ages of 17 and 65 although some will provide cover right up until age 70.

Total permanent disability cover is usually only provided up to age 60 or 65 years old.

Adults with children will find that many plans now provide critical illness cover for their children but usually only between the minimum age of one or three up to a maximum age of 18. In addition, children's critical illness cover is usually only provided for certain core conditions.

Often these conditions will include those most associated with children, like bacterial meningitis, not all of which may be covered for their parents. Children's cover is also often limited to a maximum of £15,000 to £20,000, but is often included within the plan at no extra cost to the adult.

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.

As with all protection policies it's important to understand the small print. In the case of Critical Illness Cover (CIC) an important part of these details are the exclusions.

These vary from provider to provider but for a general idea the following are likely to be included:

  • Alcohol or drug abuse
  • Criminal acts
  • Flying (except as a commercial passenger)
  • Extreme sports
  • HIV/AIDS (unless contracted from a UK blood transfusion);
  • Living abroad (outside the EU for more than 13 consecutive weeks in any 12 months)
  • Self-inflicted injury
  • Unreasonable failure to follow medical advice
  • War and civil commotion

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.

  1. Critical Illness Cover (CIC) pays you a lump sum if you are diagnosed as suffering from one of the specified illnesses. It doesn't pay an income.
  2. To receive a payment your illness must be from your provider's specified list. You can't claim on simply any sickness that affects your ability to work.
  3. Policy summaries are particularly important in the case of critical illness cover because they contain the list of covered illnesses.
  4. Not all stages and varieties of an illness will be covered.
  5. Some providers might exclude your previous medical history while others might require you to have a medical before they will go ahead with the cover.
  6. Providers might impose conditions on your cover. These can be because of your own or family medical history and you should be told what they are, and why they apply to your policy before you sign anything.
  7. Often you will have to survive at least one month from the date of diagnosis to be able to make a claim.
  8. In some cases, such as a heart attack, the severity of the condition will need to be proven with medical evidence before you can receive a payment.
  9. Critical illness insurance is different to other types of protection insurance like income protection or payment protection, so make sure you understand what it does so that you can establish that it is the right plan for you before applying.

Critical Illness Cover is not an investment - you're buying protection - so if you stop paying your premiums then you forfeit your right to receive a lump sum in the event of you falling seriously ill.

Whilst some insurers will allow holiday periods on premiums, this can increase your future premiums and it's best to check the situation with your particular provider.

Generally the rule is: you don't pay your premium - you don't have the cover you need in force.

If you've already missed premium payments then you should get in touch with your provider, as soon as possible.

The amount of Critical Illness Cover you need depends entirely on your situation - and of course the level of cover you want.

If you are single with no debts and have no children, you are likely to need less cover than someone is married, has a mortgage, large credit card debts and a wife and 2 children to think about. It also depends on what capital you have available and what income you might receive from pensions or investments.

A good starting point is to calculate your monthly expenses - you can do this online using our budget calculator which is included in the life insurance section of the Finance Navigator.

Most people add an additional lump sum onto their outstanding debts to provide an extra amount of capital that can be used for any purpose in the event of being diagnosed with a critical illness.

When deciding how much cover you need to start with, it's also worth bearing inflation in mind. It would be awful to start a policy now and claim on it in 15 years time only to find that it just doesn't have any where near the buying power that you hoped it would have, just when you need it. You can help offset the effect of inflation by including an 'indexation option' when you first set your plan up.

The indexation option helps to ensure that the benefits payable from your plan keep in line with inflation over the term of your policy to help maintain the buying power of the amount paid out.

You can buy critical illness cover direct from providers, on the internet and from financial advisers.

Not all firms will give you advice about whether or not critical illness insurance is suitable for you. As you would expect, you can obtain advice from us..

When you're taking out a policy the company selling it should tell you whether or not they will be offering advice and recommending a policy, or giving you information only.

If you're considering a policy from a company which only gives 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 needs.

Remember to check the critical illness lists, check the type and level of cover you would receive in the event you need to claim.

Remember to always give the insurance company all of your medical history information they need when you're setting up your policy because if they find even a slight irregularity then your whole policy could be void - and you might not find out until you need to claim on your policy.

If for any reason you're unsure about something it's better to mention it up front. You never know what the insurance company might decide is relevant and again any sort of misinformation could mean your policy not paying out when you really need it to.

If you're concerned about giving out medical information then most policy providers will let you send information directly to their Medical Officer. This means you don't have to discuss personal or sensitive information with your adviser - it's always worth asking about this.

It's important to remember that the premium a salesperson or website quotes you is only an estimate. The premium you have to pay to provide the cover you require will be confirmed later, after taking into account your medical history. If there is any change in the premium quoted due to a medical or occupation loading, the provider will normally confirm that you are happy to pay the extra amount prior to putting the plan in force.

Always check the documents you're given at point of sale to check you are being quoted for what you need.

And you can never be too careful. It's boring but going back over the details of type of cover, conditions, extent of cover, exemptions and illness lists will help to ensure that you know exactly where you stand with your policy.

Finally think about why you want the cover. Remember if it's exclusively to cover a lost income or pay of the remainder of your mortgage there may be more suitable types of insurance specifically designed for these purposes.

When you take out a critical illness insurance plan, you will receive a host of paperwork. Resist the temptation to simply glance at it then file it away and forget about it.

Checking the details is crucial to ensure you get the cover you think you're buying!

Below is a short list of some of the items you can expect to get in the post when you put your policy together. They might have different names depending on which provider you use but all of the information should be there in some form.

A Personal Illustration
Your personal illustration shows the premium you have to pay for the cover you require and the term of the plan.It should also outline what type of cover is being selected, i.e. basic or comprehensive.
Policy Summaries
Summarises the policy document. This includes the two important sets of information, a list of illnesses covered and the criteria that have to be met before the insurer will pay a claim.
Policy Document
This will cover the same details of the policy summary but in greater depth.This is a standard document that will normally cover the small print (terms and conditions) of the policy. Whilst it makes for pretty boring reading, it's important that you understand exactly how your policy works.
Key Features document
This document is a requirement of the FCA. It sets out features, benefits and exclusions on the policy. If you have any queries about these you should ask the adviser you are dealing with or the provider to explain the cover in more detail.
Illnesses Covered Guide
In addition to the policy summary and policy document many providers now send you a plain English guide to the illnesses covered.

The good news is that once you're on top of all of this information you can file it away and forget all about it, leaving you free to enjoy the security of your policy.

If your current policy is soon to expire then taking out a new policy or renewing the one you've already got in place is a priority.

Alternatively, if you have a policy that you're unhappy with or would like to look at replacement for to try get a better deal, you must first investigate all of your options thoroughly and make sure that you do not cancel your existing plan prior to having a new plan underwritten and fully in force.

In this situation it's a good idea to take you're time, shop around and make sure you understand how a new policy would work and what you gain and lose from switching.

You might find that by replacing a policy you lose some of the benefits if you have developed any illnesses since you took out the first policy. Certain conditions might not be covered under the new policy. It might cost you more or less and the cover you receive could be more or less.

Ultimately you need to make sure you still have all the cover you need in place.

Some policies allow you to increase your cover - particularly after lifestyle changes such as marriage, moving home or having children.

If you are unsure about whether or not these options apply to your current critical illness plan you should contact us to carry out a full review of your existing plan before taking out a new one to replace it.

If you are unable to increase the cover under your existing policy, you might still be better off taking out a new policy just to 'top up' your existing cover rather than ending your existing plan and replacing it entirely.

You can cancel a policy at any time, but you probably won't get any money back.

The amount you may or may not get back depends on whether or not the contract you are canceling has ever had any investment element attached to it, (which may have resulted in a surrender value building up over the years you have been paying in to the plan) and when you cancel it.

If you have taken out a new plan, you can normally cancel it within the first 30 days of starting it and still expect to get any premiums paid back (unless you've already made a claim).Your cancellation rights are normally laid out in the literature provide when you set the plan up and in the policy documents you receive.

After 30 days you can still cancel the policy but you are unlikely to be entitled to a refund of any payments you've already made.

If your are looking in to the options of replacing an existing plan, you should leaver you existing plan in place at least until you have a new plan in place and any deferred period that must pass before your new plan provides cover (i.e. the plan must be in force for at least 3 months before cover starts) has passed. Leaving the cover in place whilst you are researching your options properly helps to ensure that you have continuous cover with no breaks.

Yes it is. Critical illness insurance has become more and more consumer friendly over recent years and as such single life and joint life plans are available.

In a bid to ensure customers can always get what they want insurance companies have introduced a variety of policies, including some that you can hold with your partner, and others that combine with aspects of life assurance.

Joint Policies

Policies that allow you to share cover with a spouse/partner can save you money on your premiums, however, this is not always the best way to arrange this type of plan. Often the cover on joint policies expires as soon as the first one of the insured names makes a claim. This potentially leaves the other partner with no cover in place.

So if you fell ill and claimed on the money, then two years later your partner also fell ill, having already received benefit from the plan, there may be nothing left to pay out.

To research Joint policies and your CIC position further you can use our online personal finance consultant, the Finance Navigator

Combined Policies?

Combined life assurance and critical illness insurance policies are becoming more and more popular, not least because the premiums are often more competitive than stand alone critical illness only plans.

However, it's important for you to check if the life assurance aspect element of your policy expire's if you claim on the critical illness cover. This may not be a problem to you anyway but it is important for you to know so that if it is you can choose a plan where this does not have to happen.

The reason that this is important is that if you have a plan that expires on first claim, regardless of the fact that its a critical illness claim that paid out first, you need to be aware that if at a later stage you were to die (regardless of whether or not this was as a result of your illness) your family would not receive any further money from your policy.

Combined 'life or earlier critical illness' plans like these are very popular and are often a cheaper alternative than a critical illness only plan but failing to at least think about this issue could cause your family problems in the event of your death after you had suffered a critical illness, especially when you bear in mind that it may not be possible to get life assurance cover having suffered a critical illness prior to applying for cover.

To help you to understand some of the different terms used when you are researching critical illness plans, we've included some of the main ones in the brief summary below.

Guaranteed premiums - ensure's that you the premium rate you start with is guaranteed for the length of your policy. While guaranteed premiums are often slightly more expensive to begin with as time passes by they could represent really good value for money, especially if the companies claims experience is high and as such they start charging considerably more for critical illness plans in the future. Many providers have been trying to make revivable premiums more attractive over the last few years in an effort to reduce the amount of guaranteed premium plans they sell in comparison as they have been worried about the potential of significant levels of claims in the future. However, the popularity of guaranteed rates with professional advisers because of the certainty of future cost that they provide for there clients means that you will still find policies with guaranteed premiums fairly common place.

Reviewable Premiums - are not fixed and allow your provider to review your premium at set points in time as outlined in the key features document. Reviewable periods are provider specific and relevant to the plan being quoted. Most providers offer reviewable premium rates.

Waiver of Premium benefit - is an additional option that can be added to the plan at outset. If included, it means that the provider will pay the premiums for your plan on your behalf if, for a period of 6 months or more, you suffer an illness or injury that prevents you being able to work or if you are unable to complete a number of basic activities that you have to perform in your work and in daily life. If the waiver of premium benefit on the plan you chose is activity based, those activities are normally defined in the Plan's terms and conditions. Subject to a valid claim, the provider will normally pay the premiums on your behalf from the seventh month of your incapacity for as long as your claim is valid or until your Plan ends. Although often very small, there is an extra cost for including waiver of premium benefit.

Indexation - this is an option that can be include at outset and helps to keep the buying power of the benefits payable from your plan in line with inflation.When you start your plan, you can normally ask the provider to increase your cover each year in line with a fixed percentage amount or the increases in the Retail Prices Index (RPI). Your premium would also increase each year to pay for the extra benefit. No medical evidence is required at the time of each increase.

Total Permanent Disability (TPD) - TPD is normally available as an option with critical illness plans and is normally found as part of the 'comprehensive' or 'additional conditions' level of cover available. It is designed to pay out a lump sum benefit to the person covered in the plan who becomes totally or permanently disabled through injury and/or illness. It helps relieve the financial pressures of not being able to go to work and can help with added rehabilitation and medical expenses.

Underwriting - is normally stricter for critical illness plans than life insurance plans but can now be can now be done over the phone through tele-underwriting where questions asked can be tailored to the individual applicant's circumstances. This has proven particularly practical with many providers having already extended their application forms up to 30 pages to help identify higher risk individuals.

A complication for critical illness insurance providers face is medical progress.

  • As research finds more and more cures and preventions for serious illnesses, it may be that you are diagnosed with a critical illness that has become a non critical but you are still entitled to a pay out under the terms of your contract.
  • More testing to reveal treatable early-stage cancers could lead to people being diagnosed years before any symptoms actually develop.
  • More sophisticated testing may show that more people have had previously undetectable heart attacks.
  • Improvements in genetic testing might allow some people to know that they are at higher risk of suffering a particular critical condition.

This is an interesting area that is worth keeping an eye on, especially if you are considering swapping an old plan for a new one.

To research your critical illness position further you can use our exclusive interactive research tool, the critical illness finance navigator.