Critical Illness Insurance

A critical illness insurance policy works in exactly the same way as a level or decreasing life policy. However, it will pay out the sum assured upon diagnosis of one of a specified list of critical illnesses (which will vary from insurance company to insurance company). It is essentially “life cover for the living.” The pay out will usually be after a deferred period of 28 days. Any claim made under this type of policy, will end the contract.

The most common way of setting up a critical illness insurance policy is to combine it with life cover and total and permanent disability. That way, you cover “all of the bases:”

• Life cover – this will pay out the sum assured if you die within the term of the policy
• Critical illness – this will pay out the sum assured upon diagnosis of a critical illness
• Total permanent disability – will pay out if you become medically disabled due to an accident

Critical illness insurance policies are more expensive than life assurance policies, as the chance of an insurance company getting a claim against the policy is higher than with just a life policy. Like all insurances, the premiums are calculated based on the potential risk of a company having to pay out.

Not all illnesses are covered by these polices (not all cancers are covered for example, like skin cancer). If they were, no one would be able to afford them. The list below, which show the illnesses covered by most contracts should only be taken as a guide:

• Firstly, you do get what you pay for. Cheaper contracts will generally cover fewer illnesses, and / or the severity of the illness needed to justify a pay out will have to be more sever.
• Secondly, even good contracts will not cover more minor ailments, but will generally cover more medical conditions. There will still be qualification criteria under each ailment before a claim will be honoured. Specific details for the relevant insurance company can be provided upon request.

The above should not put anyone off taking critical illness cover. However, it is important to understand how it works in order to avoid confusion later. The following is a sample list of the types of conditions which could be covered:Alzheimer's disease

Angioplasty
Aorta graft surgery
Aplastic Anaemia
Bacterial Meningitis
Benign brain tumour
Blindness
Cancer (most malignant types)
Cardiomyopathy
Chronic Lung Disease
Chronic rheumatoid arthritis
Coma
Coronary artery by-pass surgery
Creutzfeldz-Jakob Disease
Deafness
Dementia
Diabetes
Heart attack
Heart valve replacement or repair.
HIV/AIDS from assault
HIV/AIDS from bloody transfusion
HIV/AIDS from occupational duties or accident
Keyhole Heart Surgery
Kidney failure
Liver failure
Loss of independent existence
Loss of limbs
Loss of speech
Major organ transplant
Motor neurone disease
Multiple sclerosis
Paralysis/paraplegia
Parkinson's disease
Progressive Supranuclear Palsy
Stroke
Third degree burns
Total permanent disabili