Critical Illness Cover

Critical Illness Cover is a form of term insurance policy that can pay a cash lump sum, free of tax if the policy holder is diagnosed with a life threatening critical illness. Critical illness cover can be used by the policyholder in two main ways. Firstly in conjunction with a mortgage to clear any outstanding sum or secondly to provide an income for your dependants by way of investing and/or a capital draw down. The most common critical events covered are cancer, stroke and cardiac arrest. However many other illnesses are also covered by most critical illness cover providers. In fact the Association of British Insurers (ABI) has an industry standard list of critical conditions that are covered by 90% of companies as standard. Some insurance companies cover more conditions than the (ABI) sets out.

Critical Illness Cover is also available from certain providers on a reduced benefit basis. This means that only the core list of conditions are covered for the full sum assured on the policy schedule, with the less common critical conditions receiving a smaller proportion of the payout. The Unum Elixia 123 policy is an example of this type of cover, the main advantage is that the premium you pay will be very competitive when compared with most other critical illness cover providers, but this will be at the expense of cover.

Critical Illness Cover can also bought in conjunction with life insurance commonly referred to as term assurance. Some providers will give a small discount from the premium if you take out a combined policy. It is also possible to tailor the sum assured differently for the critical illness and life insurance elements of the plan.

Remember critical illness cover is generally more expensive than life cover when compared on an equal footing because you are statistically more likely to make a claim of your critical illness cover than you are to die.