Review Critical Illness Insurance

One company may regard a minor thrombosis lightly and require no extra premium, while another may take it much more seriously. Although most offices today adopt a reasonable attitude to underwriting requirements, anyone with an impairment needs the advice of someone familiar with the attitudes of different life offices and capable of selecting the one that is suitable.

The occupation of the critical illness insurance proposer normally has no bearing on the rate of premium, but there are a few occupations which through experience companies have found to have a higher mortality rate and for which a higher premium may be charged. These include miners, deep-sea divers, publicans, steeplechase jockeys and steeplejacks. (In peacetime, members of the armed forces are normally accepted at standard rates unless they are, say, aircrew, bomb disposal squad, or are likely to be posted to a political troublespot.) The extra premium charged in any of the above cases varies from company to company. The loading will amount to a substantial percentage on pure critical illness-protection policies but to a much smaller one on with-profit policies.

It should be added, however, that if a critical illness insurance policy is taken out while the proposer is in a non-risky occupation then the office has no power to raise the premium if he later moves to a risky one. Leisure activities pursued by the proposer may also add to the risk involved for the critical insurance office. Flying, gliding, rally driving and mountaineering are among those that some offices will regard as requiring an addition to the normal premium.

As an alternative to an extra premium, an office may agree to apply a “debt” to a policy and this means that in the event of death they will deduct an amount from the sum assured; this amount may be fixed or it may reduce year by year over a fixed term. In effect, a proposer backs himself against the underwriter’s judgement. While this solution may be practicable under an investment contract, it is not to be recommended under a critical illness insurance policy.

Inevitably efforts are made to compare critical illness insurance policies with conventional policies in terms of actual results. A couple of qualifications are in order before even attempting this. The first is that the aims are different. Conventional critical illness insurance is designed to produce a steady, non-fluctuating up trend in maturity values. The investment risks are spread across a wide spectrum of assets and also over time. Critical illness insurance is designed to enable the investor to take whatever risk he wishes, and in whatever market, using the umbrella of critical illness insurance to add to the investment benefits through tax concessions (this is the principle; in practice, many contracts offered by conventional life offices reduce the risks and otherwise alter the system, for example by providing much larger life cover).

The second qualification is that conventional critical illness insurance has been going a lot longer than others. The oldest critical policy has not yet run for a full 20 years and some of the largest insurance companies have been selling policies for less than 10 years. The newer types of policy involving investment in property and managed funds have been available for even shorter periods. So the basis for comparison is somehow limited.

Comparisons are possible between conventional policies and newer policies involving investment only in shares. As one might expect, the results fluctuate much in line with the stock market. Thus, an equity-linked policy maturing in 1972 when the stock market was at a peak produced 40% more than the best conventional policy over a period of 10 years; one maturing in 1974 when the market was at a low produced 35% less. The variation in maturity values can be enormous even over short periods, though as we have seen the policyholder has the option to defer taking the proceeds.

The experience to date of property-linked and managed fund-linked policies is that they produce results somewhat less volatile than those of pure equity-linked ones, though still, of course, more volatile than the values of conventional with-profit critical illness insurance policies.

A solution often suggested for the younger person is the combination of other insurances to critical illness insurance. The advantage of the whole-life policy added to critical illness insurance in this context is its flexibility. The policy may be used as collateral to raise a loan; critical illness insurance companies themselves will usually lend up to 85 - 90% of the surrender value to the policyholder, interest being paid only on the loan with the capital being repaid out of the maturity proceeds (or repayable earlier at the policyholder’s option). Or the policy may be made ‘paid-up’; this means that the policyholder stops paying premiums, and the company keeps the policy in force with a reduced sum assured (bonuses already earned would not be reduced). The policy then continues to share in bonuses in the normal way (though a few companies still do not allow paid-up policies to earn any more bonuses). The disadvantage of the critical illness insurance policy is its slow build-up in value, and for most young people, whose needs, say, 10 to 20 years ahead are uncertain, this is a considerable drawback.

Generally, therefore, critical illness insurance may be of more use and relevance to those in the lower age groups, who can use it for pure protection or investment, or both, and whose needs and incomes are more closely related to the cost and benefits provided. One unfortunate phenomenon in the critical illness insurance business in recent years has been the sale of policies to older people by some advisers motivated solely by commission, which until 1976 was far higher on this type of policy than any other for the same amount of annual premium.

Non-profit critical illness insurance polices are not, as such advisers sometimes claim, of any use whatsoever in obtaining a mortgage nor in providing for its repayment (taking out a non-profit critical illness insurance policy may be the price an adviser demands to obtain someone a mortgage, but that is another and more unpleasant subject). Students are in most cases ill advised to buy such policies.

Critical illness insurance provides a cash lump sum which is completely tax free to the policyholder after he has claimed for a disease which accurately matches policy definitions. The amount of cover that you can get from critical illness insurance can vary from one company to the other. Also, you need to carry out a good planning in order to decide how much cover you might need in the future. If you have a mortgage or children going to the university or school, then you might consider for a higher coverage amount. It would be wise to safeguard your family from the eventuality of losing your income through illness. In other words, critical illness insurance can provide financial constancy at the most crucial time.

At the time you make a claim, your insurers will examine it to see if you are in rule with the stipulations found in your policy. The illness claimed for must appropriately match the definitions found in the critical illness insurance policy; otherwise, your claim will be turned down. This type of refusal is called ‘not meeting policy definitions’. Another cause of denial by critical illness insurance to make a payout is ‘non-disclosure’. A case of non-disclosure can be pointed out when the insured fails to let his insurers aware about his past and present medical conditions. This includes that of his family as well because there might be the presence of hereditary diseases such as cancer, heart attack and stroke among many other illnesses.

After a claim is made, the owner of the critical illness insurance policy will have to undergo a waiting period. The waiting phase may usually be around 28 days. In case the insured dies within this period, no benefits at all will be payable by critical illness insurance. If you need benefits in such an event, you have to buy the return of premium rider at the start of the policy. When death takes place, the inheritor will obtain all the premiums that the policyholder had contributed since taking out the critical illness insurance scheme.

Many people have moved a step forward to find a suitable critical illness insurance plan via the internet. Seeing an increase in the rate of people finding insurance on the internet, many companies started to progress and use this new facility. But this caused a few problems. Many companies which provide critical illness insurance wanted to make the applicants have a medical test to ensure that all applications are legitimate. It would really be discouraging if you find that your claim being rejected or notice a lack of cooperation from your insurers.

 In case you smoke then you could be treated as a high risk prior to making your critical illness application. In fact, even people who had stopped smoking for a couple of years may be considered as high risk by critical illness insurance. As a matter of fact, you might not be allowed protection with some insurers. On the other hand, you may get critical illness insurance but with high premium payment rates. Other companies may even consider some aspects such as your age, sex, health and work among others before they issue you a critical illness insurance scheme. Your premium rates might then fluctuate depending upon the details that you provide.

Critical illness insurance can be very sensative to many things, after all it is one of the most claimed on polices in the protection market. It has far more claims than life insurance as there is a much greater possibility of getting a critical illness than dying. Critical illness insurance can be very expensive in some cases, it is far more expensive than life insurance only as the insurers price risk mainly. Critical illnes plans are a good way of providing a bit of security should anthing bad happen to you and help give family some protection.

Benign Brain Tumour

A non-malignant tumour or ulcer in the brain, cranial nerves or meninges within the cranium, resulting in permanent neurological shortfall with persevering medical indications.

For the above definition, the following are not covered:

•         Tumours in the pituitary gland.

•         Angiomas.

What is it?

A benign tumour is an atypical development of tissue which is not cancerous. The benign tumour can apply pressure on the brain causing severe damage on the neurological capacity of the patient who is then never treated. The surgery can be removed by surgery or other treatment methods might be employed to reduce its size.

When would critical illness insurance pay?

Critical illness insurance will provide the cash after the exact confirmation of the damage done to the nervous system by the brain tumour is received.

When won’t critical illness insurance pay?

A claim will be rejected and subsequent payout by critical illness insurance will be refused if there is no enduring neurological damage or the tumour or laceration is found elsewhere, for instance, in the pituitary gland. In addition to, Angiomas are not included.

Bacterial Meningitis

Bacterial Meningitis which produces swelling of the membranes of the brain or spinal cord that leads to permanent neurological shortfall with continuing medical signs. The identification of bacterial meningitis has to be proven by a Consultant Neurologist.

All other forms of meningitis including viral meningitis are not covered for the above mentioned definition.

What is it?

Bacterial meningitis can be described as an inflammation of the meninges and the brain. The meninges are casings which serve as enclosure to the brain.

When would critical illness insurance pay?

Critical illness insurance will pay after verification of a clear conclusion of a bacterial meningitis by a Consultant Neurologist. For a claim to be successful, evidence of the permanent breakdown of the nervous system which results in permanent neurological or physical disability must be provided.

When won’t critical illness insurance pay?

Critical illness insurance will not award the cash lump sum if no permanent neurological disorder or physical disability exists. On the other hand, other forms of meningitis, including viral, are clearly excluded.

Critical illness insurance is a type of protection insurance that pays out a lump sum or in some cases income until the term ends if you are diagnosed with a critical illness that meets the policy definition. The policies offered by the different providers vary greatly and is an important decision from the outset to make is which provider to go with. Some of the poorer contracts do have only 27 condtions that the cover you for whereas the better ones have up to 40. Obviously when taking out the contract you want to get as many critical illneses covered as possbile as this will give you a greater chance of getting paid out and making a claim on the contract. As with the majority of protection products the importance of having critical illness insurance doesn’t appear important until making a claim. Bearing this in mind it is important to get the correct amount of cover with the best quality of cover as possible.

So now we know a bit more about critical illness insurance and what is covered, we need to ask ourselves do I need it. Well if you have outstanding liaiblities and a family the answer is yes. The critical illness can prove invaluable to provide that little bit of security in the event of something terrible happening. The insurance will help through what will be a very traumatic time anyway.