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Critical illness cover is available from a number of different insurers and will provide a one off tax-free cash lump should the policy holder be diagnosed with having one of the specified critical illnesses during the term of the plan. The cost of critical illness insurance can be more than if you were to take life insurance only out. Generally, a critical illness is known as life-threatening condition.
The Association of British Insurers issued a ‘Statement of Best Practice’ which gives a clear working directive that insurance companies selling critical illness insurance are expected to adhere to. The ‘Statement of Best Practice’ defines a range of critical illnesses, these include seven ‘core illnesses’ that are covered by all level term critical illness plans and over 20 others illnesses which not all policies will cover.
Cost of critical illness - Cost of critical illness cover - Cost of critical illness insurance
It is up to the individual insurance companies how many and which illnesses, over and above the core illnesses, they cover on their critical illness policies. The ABI in association with the British Medical Association produced clear definitions for all the illnesses. This was to prevent obscurity when it comes to a claim being valid or not. For example, the definition for a heart attack, which is one of the main core critical illnesses covered by all insurers, includes;
- Death of heart muscle as a result of inadequate blood supply
- Chest pain
- Electrocardiograph changes
- Elevation of cardiac enzymes
For a valid claim the policy holder will be required to meet the above definitions on diagnosis. If the person insured has one or more episodes of chest pain but with none of the other symptoms as stated above, then their critical illness plan will not pay out.
However, it is important to be aware that some critical illness plans will not pay out immediately on diagnosis of a specified illness as most insurers have a stated survival period, this is the same not matter the cost of critical illness cover. This is a set number of days, anything from 14 to 30 days, after diagnosis that the policy holder is required to survive before the plan is payable. Therefore, should the person insured die within that survival period the critical illness plan will not pay out. Due to this life cover is commonly sold with critical illness insurance. A critical illness with life insurance plan will always pay out the sum assured on a valid claim; either under the critical illness component to the policyholder or the beneficiary if the policyholder
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