UK Life Insurance Cover

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How does Critical Illness cover work?

It’s a way of providing a tax free lump sum if you become seriously ill.

Critical Illness Insurance provides a tax-free lump sum if you are diagnosed with a critical illness which is included on the schedule of critical illnesses issued by your insurance company. Under the policy’s “total and permanent disability conditions”, you can also claim if you have an illness or an accident which means that you cannot work again.

You can spend the money anyway you want.

The one point you should be aware of is that with critical illness insurance you need to survive a minimum number of days following diagnosis in order to claim. This is known as the survival period. With most insurance companies the survival period is 28 days but some have reduced this to 14 days.

Critical Illness Insurance provides much more extensive cover than just Terminal Illness Insurance, as Critical Illness cover is not related to your life expectancy. Indeed, all the Critical Illness policies we sell include Terminal Illness cover at no extra cost.

All the critical illness policies we sell also include cover for “total and permanent disability”. This means that if you suffer from any condition or have an accident that totally and permanently prevents you from working, then you have a claim.

However, before an insurance company pays a “total and permanent disability” claim they will need to know that you are too ill to ever work again. But it is up to you to decide how you want them to define being “out of work”. That is why, before we can quote you, you need to decide what type of employment cover you require. On our web site you have three options:

Conditions that prevent you from following: -

• Your own existing occupation. This is the most expensive option
• Any employment to which you are suited. This is the medium-priced option
• You’re not fit to do any work of any kind. This is the cheapest option
• You will have to decide which of these three employment options you want.

You can add Critical Illness cover to a Life Insurance policy, making it a combined policy, and this generally saves significant sums compared with having two separate policies. In fact, sometimes you can buy a combined life and critical illness policy cheaper than just a critical illness policy by itself. If it’s really only critical illness insurance you want still try getting a quote combined with life insurance – you may get both together and save money!

Other relevant questions…

What are the benefits of Critical Illness Insurance?
Which illnesses qualify as critical?
Mortgages