Critical Illness Insurance FAQs

Here are some frequently asked questions and their answers which may also assist:

What are the most common critical illnesses covered?

The UK Association of British Insurers (ABI) issued a Statement of Best Practice for Critical Illness Insurance which includes a number of standard definitions for common critical illnesses which all regulated insurers use in relation to their critical illness insurance products, the definitions in the current statement dated April 2006 are:

• Alzheimer’s disease (before a certain age)
• Aorta graft surgery
• Benign brain tumour
• Blindness
• Cancer - excluding less advanced cases
• Coma - resulting in permanent symptoms
• Coronary artery by-pass grafts
• Deafness
• Heart attack
• Heart valve replacement or repair
• HIV infection - caught in the UK from a blood transfusion, physical assault or at work
• Kidney failure
• Loss of speech
• Loss of hands or feet
• Major organ transplant
• Motor neurone disease (before a certain age)
• Multiple sclerosis
• Paralysis of limbs
• Parkinson’s disease (before a certain age)
• Stroke
• Terminal illness
• Third degree burns
• Traumatic head injury

As at April 2010 the above list is in the process of being reviewed as part of the 2009 Review process and the following additional model definitions have been proposed:

• Cardiomyopathy - resulting in a marked loss of the ability to do physical activity
• Complex regional pain syndrome - with clinical symptoms lasting for at least 12 months
• Chronic severe rheumatoid arthritis - resulting in a loss of the ability to do specified physical activities
• Respiratory failure - resulting in breathlessness even when resting
• Severe brain damage - resulting in permanent symptoms
• Severe Crohn's disease - with symptoms that have not responded to optimal therapy
• Severe specified mental health conditions - causing an in-patient stay of at least 8 consecutive nights
• Specific surgery for severe back or neck conditions It also proposed a new model definition, "loss of the physical ability to look after yourself", based on losing the ability to do at least three of six specified tasks (such as washing and getting dressed unaided) with no reasonable prospect of improvement.

 

What does Total and Permanent Disability mean?

The international law firm Pinsent Mason's online site Out-Law.com provides the following statement on Total and Permanent Disability in relation to critical illness insurance:

"Total permanent disability (TPD) is covered by most critical illness policies. In the absence of any model definition, however, each insurer applies its own interpretation to assess whether someone has become totally and permanently disabled.

Broadly, TPD has been taken to mean that the person is too ill to work. But insurers have devised different ways to assess TPD according to the person's inability to carry out their "own", a "suited" or "any" occupation, or, if not in work, a number of specified daily living activities or functional tests.

Research has shown, however, that consumers do not really understand the meaning of "total" or "permanent". And because TPD is often linked to being unable to carry out an occupation, they easily confuse it with income protection and assume the policy will pay out a monthly income for a period when they cannot work. As a result, TPD coverage disputes are common. Although TPD accounts for only 3% of all critical illness claims, 55% of TPD-related claims are declined by insurers. 35% of complaints to the Financial Ombudsman Service about what is covered under critical illness policies concern TPD.

The ABI says the current position is not sustainable. It intends that TPD should no longer be included in critical illness cover in its current form. Instead, a set of model definitions would together provide equivalent cover and be easier for customers to understand."

 

What is meant by 'Survival Period'?

A survival period (also known as a waiting period) is the period of time you must survive from the date you were diagnosed with one of the critical illnesses specified in your policy, in order for your claim to be valid. So even though you may have been diagnosed with a specified critical illness, if you subsequently die within the specified survival period (between 14 and 30 days) the critical illness policy wouldn't pay out.

However, there are two ways you can protect your self in this situation. The first way is to combine Life insurance with your critical illness policy, if you die within the survival period the policy would still pay out under the life insurance part. The second way is to add a Terminal Illness option to your critical illness policy, this would pay out your sum assured if your doctor thinks you won't survive longer than 12 months after diagnosis including the first 30 day survival period.

 

Which critical illnesses are excluded from critical illness insurance cover?

Insurers vary in their policy exclusions so always check your policy wording carefully, but the Association of British Insurers has issued a list of model exclusions as follows, most insurers will not pay a critical illness claim if it is caused directly or indirectly by:

• Alcohol or drug abuse
• Criminal Acts
• Flying
• Hazardous sports and pastimes
• HIV/AIDS
• Living Abroad
• Self Inflicted injury
• Unreasonable failure to follow medical advice
• War and Civil commotion.

Download the Critical Illness Cover Insurance PDF Guide here - see our other free PDF guides here

Guide Contents

What is critical illness insurance?
Why you might need critical illness insurance
What are the different types of critical illness insurance?
Critical illness premium options
Shopping around for your critical illness insurance
Applying for your critical illness insurance
Critical illness insurance FAQs
Where can I go to get more help?

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