Insuring Illness

Just over 22% of the British population will suffer a serious illness before they reach retirement age. The financial pressures caused by the resulting loss of earnings can be extra stress in what is already a difficult time. Critical Illness Cover (CIC) is a form of insurance that is designed to help deal with your financial duties in just such a situation.

CIC policies cover for many of the major illnesses, though they vary a little from lender to lender. All policies will include: cancer, heart attacks, kidney failure, MS, strokes, organ transplants, and heart bypasses and will also pay out in the event of the policyholder suffering a permanent disability and possibly some other, less common illnesses.

You will notice, however, that HIV/AIDS is not included on that list, and there are very few policies that cover for it. Many policies will also not pay out in the event of the policyholder developing a non-invasive tumor.

Just because a certain policy doesn''t cover as many illnesses as another doesn''t necessarily mean that it''s a bad idea. Some policies that cover just about every illness are simply an excuse for the lender to make more money, they''ll be covering you for yellow fever (for example) but the chances of you contracting it and them having to pay out are relatively low.

Critical illness cover is a distinct form of insurance in its own right, if you buy a policy a lender may offer to sell you life insurance and PPI in the process, but if you don''t already have those policies, it''s not necessary to buy them. For single people with no dependents it''s a better idea to have CIC than life insurance because a lump sum that pays off the mortgage or other financial responsibilities is probably more important than having life cover.

It can also be particularly important if you do have dependents, especially if you''re the main earner in the house. Of course there''s no reason not to have both CIC and life insurance, but make sure that you check the policy documents thoroughly unless you can afford to pay two sets of premiums that may overlap in what they cover.

In the last few years the cost of a CIC policy has gone up quite dramatically. As medical treatments and technology advance (and become more expensive) so to do the premiums. So if you''re considering getting CIC it''s better to take out a policy sooner rather than later.

CIC can be an extremely important form of cover to have. If you do have a policy, look for one that pays out quickly in the event of you developing an illness, some policies require a waiting period of as much as a year, and if you''re seriously ill you often will need the money immediately. For further advice, check out the Association of British Insurers for the full list of illnesses covered and added information on what you should expect from your policy.

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Otha Isiminger has critical illness cover with Legal

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