Critical Illness Cover - More Important than ever?
Written by Niel Gavin on 06/09/2019

What is Critical Illness Cover? 

Unlike Life Assurance that only pays out on death or the diagnosis of a terminal illness, Critical Illness Cover is a different animal altogether. 

In 1983 a South African, Dr Marius Barnard, introduced the first plan of its kind, named “Dread Disease Cover” this catchy-titled cover was something completely new in the lump sum insurance market. 

Up until that point you had two choices to provide insurance, a lump sum on death or a regular income on illness/injury, Life Assurance of Permanent Health Insurance (income Protection as we now refer to it). 

But Dread Disease Cover was something in between…..it was designed to pay a lump sum to the policyholder, while they were still alive. 

This was separate to both Life Assurance and Permanent Health Insurance (PHI) and could allow the policyholder the flexibility to have a lump sum while alive, while PHI could replace a large proportion of someone’s income, it could not provide for the repayment of the mortgage for example and so Dread Disease Cover was often taken out to cover a mortgage, in addition to Life Assurance. Now policyholders could suffer a serious illness, survive it and be able to get rid of their mortgage. 

Thankfully the name was changed from Dread Disease Cover to Critical Illness or Serious Illness Cover (no-one likes the word Dread except 2000AD readers!) 

Why is Critical Illness Cover valuable? 

Quite simply because it can be claimed upon the diagnosis of one of a number of what are termed “Critical Illnesses” 

And the statistics regarding these illnesses are sobering to say the least: 

According to the Office of National Statistics latest data regarding Cancer (from 2016 released end of 2018): 

  • In 2016 303,135 cancer cases were reported in the UK, equivalent to 828 cases reported every day
  • More cancers were reported in men than women
  • Over 65% of cancers were in those aged over 65 

On a wider scale, data suggests that between age 20-40: 

  • A man has 1 in 11 chance of being diagnosed with cancer before age 65 and a woman a 1 in 7 chance
  • A woman has  1 in 17 and a man a 1 in 7 chance of a heart attack before age 65
  • A man has a 1 in 26 and a woman a 1 in 27 chance of a stroke before age 65
  • Overall a man has a 1 in 4 and a woman a 1 in 5 chance of being diagnosed with a serious illness before age 65 

But equally as important: 

  • 40% of cancer suffers survive for at least 3 years
  • 80% survive a heart attack and over 50% of those are still alive 10 years later
  • Stroke is the UK’s largest cause of disability with 350,000 people affected by this at any one time, with 70% of stroke victims surviving more than 12 months 

So Critical Illness Cover can be extremely important. It can offer the policyholder options that Life Assurance and IP cannot. 

They can repay a mortgage to reduce their outgoings.

It can pay for alterations to homes or vehicles if required.

It can pay for convalescence

It can help to reduce the potential stress that can prolong or exacerbate an already stressful time

It gives a person choices…… 

So you say this is best suited to those clients that have children and mortgages right? 

No! 

This is suited to every single person. Remember they can benefit while they are still alive...... 

What this can give a person is the security that even if they don't die, they can have some form of lump sum financial security, there is nothing worse in my opinion than knowing you have tonnes of life cover for when you die but if you by some chance survive, you have nothing and have no choices.....

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