Critical Illness
Critical illness cover is sometimes known as "dread disease insurance". This type of cover was introduced from South Africa in the early 1990s and filled what was considered to be a huge gap in the protection market.

People who suffered a serious illness such as a heart attack, would often find that their income protection plans would only pay for a period of time as after a suitable period of recuperation, their doctor considered them fit enough to go back to work. Quite often a second and possibly fatal heart attack would follow. Often people would want to get back to work as even if they were receiving the benefits of an income protection plan, this would be less than their salary (purposely so as an encouragement to return to work).

So "critical illness cover" was born. This type of cover will pay out a lump sum on diagnosis of one of a range of specified critical illnesses eg stroke, cancer, heart attack, paralysis. (The benefit can sometimes be paid as an income, though this is less common than the lump sum option). It is commonly combined with life assurance to provide a "split policy". For example if you wanted a plan that would pay out £100,000 on death or earlier critical illness cover but you could not afford it, you could opt for a plan that would pay out £50,000 on death or earlier critical illness cover with a further £50,000 payable on death only.

One of the laws of unintended consequences was that as suffering a "dread disease" was easier to imagine than being unable to work long term, whilst critical illness cover sales ballooned, income protection plan sales plummeted. Both types of cover work in tandem with each other and relying on one type rather than both is a highly dangerous strategy. For example someone with chronic back pain who is unable to work would not qualify for a critical illness claim, whilst someone who was diagnosed with cancer would not necessarily qualify for an income protection claim, if in the opinion of the doctor they could return to work after their initial treatment.

As critical illness specialists we have access to a wide range of fund providers and can advise you on the differences between the quality of cover offered by the providers.

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