Things to consider before getting a critical illness insurance policy
Are you in the market for a critical illness insurance policy? Before you decide, you should carefully study your options to ensure that you get the best deal and to have as comprehensive cover as you can afford.
Here are some of the things that will teach you how to buy critical illness insurance:
Individual needs
Take a look at you and your family’s specific set of needs. Ask yourself some questions:
- Is there someone else in the family who is earning an income?
- How old are your children and dependents?
- What is your level of debt?
- How many years do you still have before you fully pay off your mortgage?
- Will life insurance suffice, or do I need critical illness insurance?
- How much life and critical illness cover do I need?
These are just some of the questions you should ask to determine how much and what kind of insurance you need.
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Type of policy
Some choices include:
- Separate critical illness policy
- Life and critical illness combined (learn more about this option by following the link)
- Severity based policies (learn more by following the link)
Please note: The difference between a critical illness as a rider and a combined life and critical illness plan is that when a claim is made from the first, the life insurance policy will still be effective. For the latter, once a critical illness claim is made, the life insurance cover also terminates.
For severity-based policies, payments are made in percentages, depending on how severe the illness of the insured is.
Critical illnesses included
How are critical illnesses defined?
ABI. The critical illness as defined by the Association of British Insurers.
ABI+. This is ABI, but with improvements, i.e. less restrictions (“one limb” instead of “two limbs”, no age limits, etc.)
Own definition. When no ABI definition is provided for a certain illness or if the definition of the provider is different from the ABI definition.
To learn more about how various illnesses are defined here is a list of covered critical illnesses and their definitions.
Look for critical illnesses that you feel you will be particularly susceptible to. The illnesses covered will vary from policy to policy.
One way of determining the best cover is determining the range of serious illnesses included, as well how each illness is defined. Look for ABI or ABI+ definitions or how “Own definition” can add value to the cover.
Premiums vs. budget
Get a policy you can afford, given your budget. It will just be a waste if you buy a high level of coverage only to be forced to cancel the policy due to your inability to pay premiums.
Employee benefits
Does your employer provide you with critical illness cover? If not offered as a standalone policy, this is usually provided as a rider to a life or health insurance policy. If you already have some kind of coverage, then you can save and opt for an additional personal critical illness policy to make up for any shortfall in the employee benefits coverage.
Policies with guaranteed rates and/or renewability
Ask whether your policy is guaranteed renewable without your having to go through another medical exam process. When your policy has guaranteed rates for a certain time period, the premiums don’t change even when your age and medical condition change.
Additional benefits
You can enrich your coverage by getting these optional benefits (which, of course, may usually entail additional premiums):
- Waiver of premium
- Return of Premium Benefit
- Disability Waiver
- Total permanent disability
- Automatic increase of cover option / Guaranteed insurability option
- Indexation option
- Joint life separation option
- Joint life reinstatement option
Policy Must Haves
Here are some of the things you should insist on having:
| Features | Why it’s a must |
|---|---|
|
Breadth of cover It should cover illnesses you’re concerned about and those that are the most commonly claimed. |
According to Legal & General’s Claims Report for 2011, the most commonly claimed illnesses are:
|
|
Terminal illness |
This pays the sum assured when you are diagnosed as terminally ill. Please note, though, that this may be excluded if the diagnosis occurs within the last 2 years of the policy. |
|
Total and permanent disability |
This pays the benefit when you can no longer work. |
|
Severity-based cover for some illnesses |
There are some critical illnesses that are usually excluded such as breast cancer or prostate cancer. For some policies, though, these are still payable, albeit for a smaller portion of the benefit amount. |
Items That Can Be on Your “Nice to Have” List
Here are some of the benefits and features that can make a better policy:
| Features | Why it’s nice to have |
|---|---|
|
Flexibility of the policy term |
This allows you the freedom to extend of shorten the policy term. Of course, terms and conditions apply if you opt to extend the policy term. |
|
Additional optional benefits |
These benefits (listed above) can help make the policy more comprehensive and address some of your more specific concerns. For instance,
|
Can you make changes to your policy later?
After the policy is issued, you may ask if there are any changes you can make midway?
The good news is, yes, there are a number of changes you can make to your policy, depending on your particular situation and needs. That is, of course, dependent on the terms and conditions your provider has for the critical illness cover.
Usually, you can:
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Lengthen or shorten the policy term. You can cut down or add to the length of your cover. You may need to provide additional medical evidence if you are asking to lengthen the policy term, though.
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Increase or decrease the amount of your cover. Again, if you are asking for more cover, you may have to submit to a medical questionnaire.
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Add or remove a person from the cover. If you get married and want a joint life cover for your critical illness policy, you can make an application for this. Depending on the circumstances, though, the company may set up a new plan for the joint life cover.
If you want to remove a person from the cover (in the event of a divorce or a dissolution of a civil union), you can simply request for this. For some providers, there is a Replacement Option, if you want to split a joint life policy, this allows you to get two new life covers.
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Change the frequency of your premium payments. You can choose to pay either monthly or annually.
To make changes to your policy, simply contact your agent or the provider’s customer service department. You may need to fill up some forms and submit some documents for this.
Last updated on: 18.1.2013
To protect yourself and your family, save up to 35%, please fill the critical illness cover + life insurance form on the right now.
Recommended useful information to read:
- Dos and Don’ts when making critical illness insurance claims
- What you should know about your critical illness cover: the exclusions to your policy
- Things to consider before getting a critical illness insurance policy
- Are you at risk? Critical illnesses you may be susceptible to
- Save up on premiums: factors that affect your critical illness insurance premiums