Tuesday, September 4, 2012

Critical Illness Cover - Explained

A serious illness, such as cancer or heart attack, affects one-in-four women and one-in-five men before retirement age. 

Critical illness insurance is designed to ease the financial pressures by paying a tax-free lump sum if you become seriously ill or totally disabled. You must normally survive at least one month after becoming critically ill, before the policy will pay out. 

What it covers
 
Originally known as 'dread disease cover', critical illness insurance pays benefits on the diagnosis of certain specified critical illnesses. The range of diseases covered has increased to  30, though contracts differ from one company to another. 

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. 

There are also more restrictive conditions for heart attacks. 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. 

For single people with no dependents, critical illness cover that pays off the mortgage is more important than having life cover, as it means you have fewer bills or a lump sum to play with if you are very unwell. 

But it can also be useful if you are part of a couple. It provides a welcome financial boost at a time of emotional stress and financial hardship.
 
 
The details
 
Most providers allow people to take out cover between the ages of 17 and 70. It can be for a specified number of years - as long as your mortgage, for example - or for life. Or you can just take out a policy and keep it going for as long as you choose. 

Getting covered
 
To take out critical illness cover you will need to complete a proposal form. You will be asked if members of your family have suffered major illnesses in the past. If they have, your policy may be rated, which means you will pay higher premiums or will not be covered for certain conditions. 

You may need a medical before being accepted for cover, but this does not necessarily mean you will have to pay higher premiums. You pay more if you are a smoker. 

Not all illnesses are covered. Some of the most common exclusions include HIV/Aids, drug misuse, self-inflicted injury and criminal acts. 

IMPORTANT: Be honest about your medical history
 
It is vitally important that you are honest and give the insurer the most complete information you can when applying for health related insurance. 

If you need to claim - i.e. the time you actually want the insurance to work - the insurer will trawl through your medical history for details that you neglected to tell them when you applied. If they find such information, they could refuse your claim.
It might make your insurance more expensive, but in the long run it could the difference between getting a pay out or nothing. 

Making your choice
 
Choosing the right plan can be tricky. There are more than 16 providers offering various versions of critical illness insurance. 

Policies vary widely in the illnesses they cover so don't simply opt for the cheapest plan because it will probably offer limited cover. On the other hand, don't go for the policy that covers everything from anthrax to yellow fever -it may not be the most appropriate. Policies that appear to cover every serious illness imaginable are sometimes merely an excuse for the insurer to charge higher premiums. 

Buying critical illness cover
 
The sale of critical illness cover often accompanies an important life event, such as buying a house or having children. 

When borrowers take out a mortgage, the lender may well try to sell critical illness cover, as well as life assurance or income protection, on top of the mortgage. 

It will rarely pay to accept the insurance they are offering. It is unlikely that the seller will be able to offer you the best of what is on offer from the insurance market, and there is no reason to assume it will be priced competitively. 

ING Insurance can provide a list of Critical Illness policies, you can contact me on +6 (012) 634 9414. 


Making a claim
 
Payment is generally made within 30 days of a serious illness being diagnosed though in the event of permanent disability it will take longer - usually six months to a year. 

Critical illness insurance is different to Income Protection (also known as permanent health insurance).

Using your payout
 
How you use the benefits is entirely up to you. They may be used to pay off a mortgage or clear outstanding debts. They can also help to pay for childcare or home help. 

Crucially, benefits from a critical illness policy give you time to come to terms with your condition and decide what changes you want or need to make to your life. 

If you change your mind
 
Most policies should have a 14-day cooling off period when you can change your mind. If you contact the insurer and cancel the policy in this time you should receive a full refund of your first premium.

Contact me to enquire about ING Premier Critical Illness at :
Anuradha .R
+6 (012) 634 9414
engineer2207@gmail.com

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