"When people say that CII (critical
illness insurance) is too expensive: in comparison to what?
The CII sale usually comes on the back of
the life insurance sale, so most people will probably
compare it to this, but is that fair?
Consider the fact that a life insurance
policy only pays out on one event - death - and the average
age of this event is 75. Whereas CII pays out on diagnosis
of around 32 critical illnesses and the average age of
claimants is around 40.
Meaning that, in theory, CII would
actually payout 35 years earlier than life insurance on
average. With such a comparison it would seem that it is
life insurance that is expensive and not CII. Obviously, we
do recognise that CII is out of the reach of many people and
the price is high for those that really need it: those in
their forties. The older someone is when they take it out,
the more expensive the product is....."
Quote from Dr Marius Barnard the
'creator' of critical illness insurance policies.
Personal debt in the UK is rocketing. We
have a total of £200bn non-mortgage related debt in this
country. And increasingly households are relying on two
incomes to sustain the standard of living; a standard of
living that would be shattered if one income suddenly
At the same time medical advances mean more
people are surviving what were once seen as terminal
conditions - although not necessarily in a state to return
to work. For example these days 75% of all stroke victims
survive but 60% of stroke survivors are left with a
disability. Critical illness insurance pays a cash sum to
the insured if he or she is diagnosed with a listed
condition during the policy term.
Inevitably the exact terms and conditions
of specific CI products vary from provider to provider but
CI products typically cover the following conditions:
Heart Attack - The death of a portion of
heart muscle as a result of inadequate blood supply to the
Bypass Surgery (Coronary Artery) - The
undergoing of open chest surgery for the treatment of a
blockage of two or more coronary arteries with bypass grafts
Stroke - Any cerebrovascular incident
producing neurological sequel lasting more than 24 hours and
causing infarction of the brain tissue.
Cancer - The presence of one or more
malignant tumours characterised by the uncontrollable growth
and spread of malignant cells and the invasion and
destruction of normal tissue.
Kidney Failure - Chronic irreversible
failure of kidneys to function as a result of which either
regular dialysis is instituted or a renal transplantation is
Major Organ Transplantation - The
undergoing as a recipient of a transplant of a heart, lung,
liver, kidney, pancreas.
Multiple Sclerosis - Where a person's
immune system attacks the normal tissues of the brain and
spinal cord, incapacitation an individual.
Aorta Graft Surgery - The undergoing of
surgery to correct any narrowing, aneurysm of the thoracic
or abdominal aorta. Narrowing of Aorta of congenital is
Primary Pulmonary Arterial Hypertension -
Is a condition of high pressure in the blood vessels in the
lung caused by leaking blood vessels.
Paralysis - The complete and permanent
loss of use of both arms or both legs or one arm and one
leg, through paralysis caused by illness or accidents
persisting for at least six months from the date of illness.
Again, different providers will have
their own terms and conditions, but intermediaries and
advisers should be aware that the following are likely to be
on a list of exclusions:
Any critical illness for which care,
treatment, or advice was recommended or which was first
manifested or contracted before the start of the Policy
Period, or for which a claim has or could have been made
under any earlier policy.
Any critical illness diagnosed within the
first 90 days.
Death within 30 days following the
diagnosis of the critical illness.
Presence of HIV/AIDS infection.
Treatment arising from or traceable to
pregnancy or childbirth, including caesarean section, birth
War, invasion, act of foreign enemy,
terrorism, hostilities (whether war be declared or not)
civil war, rebellion, revolution.
Naval or military operations of the armed
forces or air force and participation in operations
requiring the use of arms or which are ordered by military
authorities for combating terrorists, rebels and the like.
Any natural peril.
Consequential losses of any kind, be they
by way of loss of profit, loss of opportunity, loss of gain,
Of course this will depend on the
insurance provider, but 14 days after the specified illness
being diagnosed is a good guide.
Payments under CI products in the UK are
completely tax-free under current legislation.
No. Policyholders are free to chose how
they use payouts. Commonly the cash is used to meet mortgage
repayment responsibilities, pay other bills, or even for
funding further medical treatment.
Critical illness cover is not an
investment or savings policy. Clients cannot cash-in the
policy as the product will only pay out on specific events
during the term of the policy.
Yes. Some policies make provisions that
would cover children for the listed conditions, while they
are between three and 17-years-old, provided the policy is
in-force. The benefit on such protection is generally around
25% of the adult payout.
As with adult claims, the child must
survive for 28 days following the date of diagnosis of one
of the specified critical illnesses. For the most part,
where it is applicable claims for children do not affect the
Source: Health Insurance & Protection
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