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What is critical illness life insurance?

Critical illness life insurance describes an insurance policy that will result in a pay out if you are diagnosed with a critical illness. A critical illness policy can be a stand alone policy or can be an optional addition to a traditional whole or term life insurance policy. It must be made clear that the insurance company will only pay out a sum if the critical illness that you are diagnosed with included on the list of covered medical conditions set by the insurance company. Whilst illnesses such as cancer and Alzheimer’s disease are included in this list there are often conditions attached. As an example, most insurance companies will only pay out to a customer diagnosed with Alzheimer’s if the customer is under the age of 60. Below is a list of some of the 27 critical illnesses that are covered by a critical illness option on a Tesco life insurance policy as quoted in their Guide to Critical Illness. The illnesses listed below are fairly typical of critical illness coverage but some companies will cover different illnesses.

Alzheimer’s Disease (before age 60), Kidney Failure, Aorta graft surgery, Loss of Independent Existence (after age 60), Benign brain tumour, Loss of Limbs, Blindness, Loss of Speech, Cancer, Major Organ Transplant, Coma, Motor Neurone Disease, Coronary artery By-pass surgery, Multiple Sclerosis, Creutzfeldt-Jakob Disease, Paralysis, Deafness, Parkinson’s Disease (before age 60), Heart Attack, Pre-senile Dementia (before age 60), Heart Valve Replacement or Repair, Stroke, HIV resulting from a Blood Transfusion, Third Degree Burns, HIV resulting from an Occupational Accident, Total Permanent Disablement (occurring before age 60), HIV resulting from a Physical Assault. 

Therefore you could be diagnosed with a critical illness, but if the illness is not included in the list then you will not receive any pay out from the insurance company that your policy is held with. In addition your treatment plan can also affect whether the company will pay out. As some treatments may lead to further illness an insurance company might not support this method of treatment. 

The advantage of taking out a critical illness policy is particularly evident with a term life insurance policy. If you do not die before the end of the term you will not receive a pay out, however if you are diagnosed with a critical illness during this time you will. A critical illness policy is there to protect you more than your beneficiaries as the pay out is made whilst you are still alive. If you have existing mortgage repayments to make and are not well enough to work the pay out will help you get through this difficult period and can hopefully provide you keep you going until you are hopefully cleared of the illness. This is particularly useful for single’s who might not necessarily have people around to support them, or families on a low income.

Most critical illness policies can only be taken out by customers under the age of 60.




Disclaimer: The information contained on this page is not intended, nor should it be construed as providing any form of financial advice or guidance as to which insurance product/policy is right for you. If you are unsure as to which product meets your requirements/needs you should always seek advice from an Insurance Professional.

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