29th August 2019

What is critical illness cover?

What is critical illness cover and what does it actually cover you for? This is a question I’m often asked. Some people think that critical illness cover means that you must have a terminal illness for insurance companies to pay out. Critical illness, fortunately, is improving all the time and insurance companies are constantly improving the quality of the cover they offer along with improving the definitions of the illnesses which means they are more likely to pay out. They are even increasing the amount of illnesses they pay out for because seven or eight years ago some companies only covered 5 to 20 illnesses however now there are even more companies who cover in excess of 150 illnesses and conditions. Mainstream insurance companies generally cover between 60 and 90 illnesses.

According to some of the main insurers we work with, 80% of all critical illness claims paid out on the main five critical illnesses which are cancer, heart attack, strokes Multiple Sclerosis, and children’s critical illness.

As I’m sure you are aware, cancer is by far the main condition claimed upon. You would assume that they would pay out for any type of cancer when that is not the case. Some companies only cover the more serious forms of cancer where the cancer is invasive and has spread from the original site. Some companies will now pay out for non-invasive in situ cancer which means it hasn’t spread from the original site. There is too much detail and too many complex definitions across the market to explain all of this now however, what I will say is, you are far better going to a company like Aviva, Vitality, Royal London, AIG and Legal and General for your critical illness cover over some of the smaller companies which you maybe haven’t heard of before. Here at Bespoke Financial Newcastle, we use all of these companies’ products as they are five star rated, have excellent claim statistics and great customer feedback. Even if you don’t use us for critical illness cover, I would always say you are better off paying slightly more going to a mainstream insurer with stronger Definitions as they are more likely to pay out.

On this point I think if you have critical illness cover in place currently you should get in touch with the broker to discuss the quality of your cover as year after year the mainstream insurers are making improvements to their plans which in turn keeps raising the bar in the market therefore the older products are dropping lower and lower on the quality scale side of things.

My view has always been if you can afford to pay £30 per month for critical illness, why not pay £35 per month for critical illness and ensure you have the best on the market. Again, in my opinion, this is a reason why you should not buy insurance by price as if you bought critical illness cover based on price alone, it will generally have less illnesses and definitions of illnesses and will not be as strong therefore they are less likely to pay out than products that are slightly more expensive.

Most of the general public may not know the different degrees of cancer or the severities of heart attacks, what insurers class as a valid claim and what will not meet the criteria. Therefore it is important to use an adviser for this type of thing so that they can advise you on the best contracts available at the time and show you the difference is using different sourcing tools and comparison sites available to advisers not to be confused with all the comparison sites where they compare price. Here at Bespoke Financial we do compare price to a degree but when talking about critical illness we also compare quality which in my opinion is the most important thing you must check and look at when taking out critical illness.