Critical Illness Issues to Consider

Before deciding on the type of policy to buy to meet your critical illness requirements, there are a number of important issues that have to be considered:

For how long do you want to be covered?

It is possible to buy policies that will cover you for as short a time as an aero plane flight to as long as your entire life, however long that may be. The longer you want the cover to last, the more likely you are to claim within that period, and hence the higher the cost. It is therefore important to consider the purpose of the protection and ensure the policy covers you throughout the time when you and your dependants would need it.

Who should be covered?

Although it is obvious to most people that the ‘breadwinner’ of the family should have protection, it is often just as important that spouses should be covered as well. This can be achieved either using separate policies or a joint policy.

What quality of critical illness do you want?

The types of policy available vary considerably in both price and effectiveness. Although most policies cover a range of illnesses and circumstances in line with minimum industry standards, there are a number of additional illnesses, circumstances and features that can be added that may be important to you. As with most things in life, in general, the more you are able to pay the better the quality of the protection.

Reviewable cover

The sum assured remains the same for the duration of the contract. Premiums are kept to a minimum as you, rather than the insurance company, are shouldering the risk of changes in mortality experience. The insurer has the right to review premiums based on claims history, which could mean premiums increase significantly at a review.

Options that enhance the effectiveness of the protection, but will increase the cost are:

• Range of illnesses and circumstances covered
• Inflation protection
• Waiver of premium
• Guaranteed rates
• Convertible option
• Renewable option
• Pre-paid in the case of permanent disability
• Definitions of permanent disability (ie ‘own occupation’, ‘any suited occupation’, ‘any occupation’, etc.)
• Pre-paid in the case of death
• Paid in addition to life assurance within the plan
• Whole of life cover
• Investment linked

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