What are the chances of it happening to me?
Most people imagine that a serious illness is something that only happens to other people. However, the real figures show a very different picture. A woman aged 20-40, has the following chance of suffering a critical illness before age 65:
- Cancer 1 in 7
- Heart attack 1 in 17
- Stroke 1 in 27
- Any of these 1 in 5
A man aged 20-40 has the following chance of suffering a critical illness before age 65:
- Cancer 1 in 11
- Heart attack 1 in 7
- Stroke 1 in 26
- Any of these 1 in 4
An aid to recovery
A critical illness plan pays out a tax-free lump sum in the event that you suffer a critical illness such as cancer, a heart attack, multiple sclerosis, or a stroke. Each policy provider will specify exactly the range of illnesses that its policy will cover - so check carefully what you will be covered for. Some recent statistics showed:
- Two fifths of diagnosed cancer sufferers aged 35-54 will survive for at least three years.
- 80 per cent of men and women aged 45-65 will survive a heart attack, and over 50 per cent of people who have a heart attack are still alive ten years later.
- Stroke is the largest cause of severe disability, with 350,000 people affected at any one time. Nearly 70% of stroke victims survive for at least 12 months.
NB: Critical illness insurance is separate to private medical insurance, which will pay for treatment in the event of critical illness. Critical illness is also different to Income Payment Protection, which pays out for a short-term period (usually up to 1 year), in the event of unemployment through short-term illness of disability.
What can Critical Illness be used for?
New Family: If you were about to start a family a critical illness policy would be a good way to ensure the entire families' protection from the outset. By buying the policy earlier in life you will also receive lower premiums because you are in better physical shape.
Homeowners (with a mortgage): A critical illness policy can protect a family in a variety of ways. If you are a homeowner and already have mortgage protection policy, critical illness can provide protection against your salary. As the family breadwinner, if were to you suffer a stroke and were unable to work a critical illness policy would ensure receipt of a lump sum. This will provide a source of income, thus ensuring your children and wife would be able to continue to live the life they were accustomed to.
NB: If you buy a Mortgage Protection policy with critical illness incorporated into the policy the lump sum paid in the event of illness will decline as the amount you have to repay declines. It is far better to have two separate policies, a mortgage protection policy and a critical illness policy. Homeowners (paid off mortgage): If you have paid off your mortgage, which included critical illness cover but still have dependents you should consider a critical illness policy. It will enable you to continue to protect your family in the event something unexpected should happen to you.
Separation: If you were unfortunate to have to go through divorce proceedings but were awarded custody you could ask your former spouse to take out a critical illness policy. If your former partner was required to pay maintenance costs but was unable to work, the money spent on the children may even stop.
If you were able to set up such a policy the money could be paid into a trust fund from which the children directly benefited. The policy could not directly name the children directly.
A word of warning
All policies should cover seven core conditions. These are cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. They will also pay out if a policyholder becomes permanently disabled as a result of injury or illness.
Be aware that from May 2003 all insurers must adopt new rules set by the Association of British Insurers, which tighten the conditions under which customers can claim on critical illness insurance (CII) policies. The changes mean that policies taken out after May 2003 won't cover non-invasive skin cancers, and less advanced cases of prostate cancer. Tumours that have not yet invaded the organ or tissue, and lymphoma or Kaposi's sarcoma in the presence of HIV are excluded.
There are more restrictive conditions for heart attacks also. There has to be evidence of typical chest pain, or changes in the electrocardiogram (ECG), for example, if a claim is to be successful. Cardiac conditions, such as angina, will not be covered.
Get a quote for critical illness cover. /money/insurance/
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