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A critical illness is a specified medical
condition such as cancer which would stop
a person receiving an income, and is unlikely
to result in the person being able to
work again. It is often known as 'dread
disease'. Critical illness insurance cover
will insure you should you suffer from
any of these specified illnesses, and
will pay out a lump sum, payable at the
time of diagnosis.
You can take out a critical illness insurance
policy in two ways. The first is as a
'stand alone' policy, taken out by itself.
The second method is to add it to whole
of life, term insurance or endowments
policies. The reason why you may do this
is that it offers you a way of getting
hold of the value of your policy not just
on death, but also on diagnosis of critical
illness, which has the same effect as
death on your ability to support your
dependents.
A critical illness insurance policy sees
you pay level premiums, the amount of
which is determined by factors like your
age, your family history (as most critical
illnesses are hereditary), whether or
not your smoke and the level or cover
you require.
Perhaps the largest gap in the knowledge
of someone taking out a critical illness
policy is the conditions under which you
are able to claim. It is actually quite
simple. When you take out a critical illness
policy, you must look out for the list
of medical conditions covered by the policy.
Whilst you may describe an illness as
critical, if it is not on the list, you
will not be covered for it on diagnosis.
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It's not just
the condition, it's the treatment as well.
Insurance companies want to make sure
that you are receiving the best treatment
possible in order to try and get you better
if at all possible. However, certain companies
will not pay out any benefits should you
choose certain treatments, such as laser
treatment, that are not approved by the
insurance company.
The lump sum that you receive is not
taxable. However, the premiums that you
pay into this policy will not be eligible
for tax relief.
Those best suited to this cover are family
men and women whose families may encounter
financial problems should they not have
an income. Single people who would not
have anyone to care for them should they
suffer from a debilitating condition would
benefit from this cover to buy in help.
Also, although your premiums would be
higher, if you have a history in your
family you would be advised to buy cover.
Finally, key people in a business should
be covered.
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