How Critical Is Critical Illness Cover?

Critical illness is up there with one of the most important issues in life that people just don't like or want to talk about. Now, at the risk of sounding depressing, have you ever thought about how you were to financially cope if you fell too ill to work? Could your family cope? Perhaps this New Year should encourage you to kick start some financial planning and preparation for just such a scenario. Don't take a macabre view on the process, see it as an investment, should (being the imperative word here) anything happen to you.

Recent statistics released by the Association of British Insurers suggest that Brit's pay an annual average of £919 on Life Insurance. This is a surprisingly high amount considering so many of these individuals have no form of critical illness cover. Most Life Insurance policies will have the option to add additional critical illness cover onto your policy. This then ensures that you and your family are provided for should you fall too ill to work. Don't buy into life cover blindly, read the small print. Most will not pay out if you become too ill to work, and instead pay out after you have passed away. This is certainly of no use if you are battling with a critical illness for years.

It would be nice to think critical illness is a little like Ronseal Quick Drying Woodstain, and does exactly what it says on the tin. Sadly, as is commonly the case in the vast world of financial services, it isn't so simple. While you'll be protected against the effects of some life-altering diagnoses, no policy covers all known conditions you may encounter.

Just 25 per cent of the British public who have life insurance, according to prudential, buy on price alone. But even if the person applying for a policy is astute, according to fellow insurer Scottish Provident, the UK as a whole, isn't. A recent study by the provider found that six Britons in ten have no protection, with just 35 per cent taking out life cover, and only 13 per cent opting for a policy that pays in the event of a critical illness. These are uncomfortable statistics to read when you consider how much debt must therefore exist without any protection.

The FSA blames a lack in the availability of information on health insurance for these low statistics. However, following their report in 2006, there has been a surge in information and advice for the consumer, particularly online. Therefore, if you, like many, are unsure as to where to begin with a critical illness policy, then do a bit of research online.

So, the basics are that Critical Illness is insurance for ill health, which usually entitles the holder to a lump-sum payment should they be diagnosed with a serious condition. A caveat is regularly put on this, specifying the individual must survive for a period of time following diagnosis, in order for payment to be issued. This is often 14 days. Heart disease, strokes, cancers, Parkinson's, Alzheimer's and kidney failure are commonly covered. One in three Britons are likely to develop cancer in their lifetime. And then heart disease remains one of the UK's biggest killers. Looking at it from this view, it seems as if the average policy will safeguard people pretty well against the big nasties.

The problems begin when you consider other so-called critical illnesses. For example, diabetes for many suffers is by no means regarded as critical. This is because most individuals can live fairly normally with the disease for years after their first diagnosis. However, diabetes is in actual fact the 5th most common cause of death. This is largely due to the fact that the disease can lead to various other health complications, including nerve damage and issues with the body's extremities. So say a diabetes sufferer was to lose their hands and feet, they would not be covered by their critical illness cover. But say a healthy individual was to lose their hands and feet in an accident for example, they would be covered by their critical illness cover. This highlights just how important it is for you to seek financial advice in order to create a plan that is personalized to your circumstance.

Basically, this means that you could have the disease, and over time develop major problems resulting in, say, impaired use of an arm or leg. While not totally paralysed, your ability to work may be restricted, or in some industries, completely prevented. It's at this point you may realise traditional insurance is neither going to cut, or cover it. While diabetics can call on specialists like Diabetic Life, this is just one example in a long list of scenarios wherein critical illness cover would have little to no effect on the holder's quality of life, despite ill health. But with stand-alone life insurance you would have no more protection against health scenarios such as these. So if you're going to take out any kind of cover, it seems sensible to make it part and parcel of the policy.

Again, we'd highly recommend seeking professional advice to find a policy specifically tailored to you. A thorough screening should include information about yours and your parental families' medical histories, in addition to lifestyle information. Sadly, many illnesses are still impossible to detect with 100 per cent accuracy. This means there is no such thing as a comprehensive policy when it comes to protecting yourself against the unthinkable and unforeseeable. So remember that the greatest insurance of all combines a well suited, personally tailored policy, a sensible financial plan for the future, and, of course, an active, healthy lifestyle. Keep this in mind, and any nasty surprises shouldn't lead to more, unnecessary shocks. Because we can't predict the future, but we can certainly prepare for it.

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