Critical Illness Insurance


Critical Illness (CI) Insurance is designed to pay out a lump sum benefit, free of income tax and capital gains tax, in the event that you are diagnosed with a serious or critical illness as defined by the insurance provider. The common critical illnesses covered include cancer, multiple sclerosis, kidney failure, stroke and heart attack. Each policy is designed for particular illnesses and you should carefully examine the policy wording before committing to one policy. Many term life insurance policies have a critical illness insurance option which you can additionally subscribe to.

When thinking about arranging critical illness insurance cover, you should try to estimate what your loss of income will be and what money you will need to compensate for the earning power which the illness deprives you of. It may be worth investigating roughly how much it would cost to make alterations to your home to accommodate you should you be unable for example to use stairs. Sufficient benefit to pay off the balance of your mortgage would provide enormous peace of mind should you become unable to earn and therefore continue to make mortgage repayments. Many advisers recommend setting your covered amount at three to four times your annual salary.

CI insurance payments are made by premium either monthly or annually and the premium which you can afford will dictate the level of benefit you will receive should you succumb to a covered illness. The premium is also influenced by your general health at the time of taking out the policy as well as factors such as whether you smoke. You are unlikely to be able to get cover for an illness which you have suffered since birth, and you will find premiums are higher if you have a history of particular illnesses in your family.

There are always exclusions however and it is likely that if your critical or serious illness is caused by amongst other things aviation, criminal acts, a failure to follow medical advice, hazardous sports or pastimes, or war you will not be entitled to receive a payment. Always read the policy carefully so that you can know whether the policy is acceptable to you.

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