What You Need To Know About : Critical Illness Cover

Over the last 40 years your prognosis on learning that you have had a heart attack, a stroke or have a serious illness like cancer has improved dramatically. But what would the prognosis be for your finances? Would you still be able to work? Would your family still enjoy their current standard of living? Would you keep your home?

Serious illnesses like cancer involve long periods of treatment and convalescence on the road to recovery. How long would your employer continue to pay you for if you were off sick for an extended period of time? Many employers are compassionate but they also have to be commercial. Many people I speak to are surprised to learn that U.A.E. employment law only requires an employer to pay full salary for 2 weeks followed by 2 more weeks at half pay. After this time it is at their discretion. A double whammy would be for you to be receiving medical treatment paid for by your employer sponsored medical insurance which would be lost if you no longer worked for them, not an unheard of event.

Critical Illness Cover provides a capital sum on diagnosis of a serious illness or condition as defined under the policy. The definitions of what constitutes a heart attack for example vary from policy to policy, so it is important that the definitions are understood before committing to a plan. If a policy is significantly cheaper than another it may be because the definitions are narrower and so a successful claim less probable. The better plans on the market currently offer cover for 30+ different conditions.As with any insurance plan you should stick with large reputable insurance companies who have the resources to pay a claim. Examples of critical illnesses covered are:

Aorta Graft Surgery Kidney Failure
Bacteria Meningitis Liver Failure
Benign Brain Tumour Major Organ Transplant
Blindness Motor Neurone Disease
Cancer Multiple Sclerosis
Coma Muscular Dystrophy
Deafness Paralysis
Encephalitis Parkinson’s Disease
Heart Attack Respiratory Failure
HIV Infection Stroke

Industry statistics suggest that you are 4 times more likely to suffer from a critical illness before the age of 65 than to die. Given this statistic if a person has life assurance they should consider critical illness cover as a priority because unlike life assurance they would witness the financial implications of being under insured in this area.

The payout from Critical Illness plan can be used for any purpose but the common one is for people to repay their mortgage {home loan] which then secures them with a place to live. They then may want an additional sum to make up for a period of lost income.Others use the money to provide for their children’s education if they are unable to work to generate the income required to send them to University or to continue to fund private education.

Critical Illness Cover should not be confused with medical insurance. Medical insurance pays for the cost of treatment of any illness or condition and the range of cover is much broader however there is no capital payment and you are only covered for medical treatment not the financial consequences of your illness.

Another type of insurance often confused with Critical Illness Cover is Income Protection. This is the subject of next week’s post.