Master of Money Management

Critical Illness cover demystified

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Being told you have a serious illness ranks up there with the top ten things you never want to hear. The only thing that would be worse than having the bad news delivered; is having no insurance to cover your treatment.

Critical illness, also known as dread disease cover, aims to pay the costs associated with serious medical conditions.  In the past only Cancer, Heart Attacks, By-passes and strokes were covered, now you can protect yourself against the costs of over 40 aliments including blindness, deafness, Alzheimer’s, kidney failure and even the loss of a limb. Critical illness insurance pays out a tax-free lump sum if you are diagnosed as having one of the specific life-threatening conditions defined in the policy.

Some policies often offer combined life and critical illness cover. These pay out if you are diagnosed with a critical illness, or you die, whichever happens first.

Not all policies cover all critical conditions but industry guidelines say that to call itself critical illness insurance, a policy must offer cover for the three major critical illnesses-· Cancer (only certain types),  serious heart attacks, and strokes – if they result in permanent symptoms. Most policies cover more critical conditions than just these three..

It is important to carefully read your policy document because coverage and conditions differ from company to company. A policy will provide cover only for the conditions defined in the policy document. In addition your condition must meet the policy definition exactly. This can mean that some conditions – such as some forms of cancer – won’t be covered if deemed insufficiently severe.

There may also be age limitations, so for example many policies will not cover Alzheimer’s disease if diagnosed after the age of 60.

If you are thinking that you might be prepared to sacrifice a limb to get a nice pay-out you are going to have to go to plan “B” for your get quick rich scheme, because you will not be covered for a Self-inflicted injury. Other conditions the policy will not cover are, alcohol or drug abuse, injury from engaging in hazardous sports and activities, HIV and Aids related illnesses – (unless caught accidentally i.e. from a blood transfusion or an assault. You also can be refused if you did not follow prescribed medical treatment. If you put on camo and do the riot and revolution thing, you won’t be covered if something goes awry.

It is important to note that very few policies pay out as soon as you receive diagnosis. Most policies pay out after a waiting period. Due to the fact that conditions and rules vary widely in policies; you may find the advice of a financial advisor is useful in helping you decide. However, nowadays polices are much simpler to understand.

If you are already suffering from a critical illness, chances are you will not qualify for cover. You may also be refused cover if you have already been to see your doctor about a health problem that later turns out to be critical, or if you have had tests for the condition within a specified time frame.

Don’t try and fudge the application form. Honesty is the best policy because failure to tell the truth about your current state of health, may result in the rejection of your policy or even a repudiation.

The cost of cover will depend on a range of factors including, your age, the type of policy you have chosen, the amount of cover you chose and the old faithful -whether or not you smoke.

When making a claim, expect some leg work. You may be required to get opinions from specialists, a diagnosis from your regular doctor may not be enough.

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