Questions About Other types of Insurance
- What is Critical Illness Insurance?
- What is Terminal Illness Insurance?
- What is the difference between Terminal Illness Cover and Critical Illness cover?
- What illnesses does Critical Illness Insurance cover?
- What is Term Insurance?
- What is the difference between Life Assurance and Life Insurance?
- What is Whole of life Insurance?
What is Critical Illness Insurance?
Critical Illness Insurance pays out a tax-free lump sum if you are diagnosed with a serious illness. The insurance company always provides a list of illnesses which it defines as “critical illnesses” within the booklet you receive with your application form. You will find a typical list of such illnesses below. For example, critical illnesses normally include deafness, blindness as well as named cancers, stroke, heart attack and many other serious illnesses.
The vital point is that with a “Critical Illness” you may well survive for very many years and during that time your earning power may well be nil or only a fraction of what it was previously. Unless you can find a way of coping with a large drop in income and possibly an increase in your living expenses, then the financial effects on your family could be devastating.
You may think that critical illness “won’t happen to you” and we sincerely hope that it doesn’t, but consider the following facts.
- 1 in 5 men suffer a critical illness before their normal retirement age.
- 1 in 6 women suffer a critical illness before their normal retirement age.
- 35% of men and 46% of women who develop cancer survive at least 5 years
- 78% of stroke victims survive more than a year.
Are you so sure that it couldn’t happen to you?
Could you cope with the financial repercussions of such illness? Critical Illness Insurance is the way to insure you and your family against the financial consequences of such a possibility.
Just a word of warning; Critical Illness Insurance is not the same as Terminal Illness Insurance. First of all Terminal Illness is included free of charge on all good insurance policies whereas Critical Illness cover always costs extra.
The essential difference between Terminal Illness cover and Critical Illness cover is that Terminal Illness only pays out if you are expected to die from an illness within 12 months of diagnosis. On the other hand, Critical Illness cover pays out if you are diagnosed with any illness that is included within your policy’s defined list of critical illnesses. With Critical Illness Insurance your life expectation is not an issue.
Now consider again the fact that 35% of men and 46% of women who develop cancer will survive at least 5 years and that 78% of stroke victims will survive at least a year. We think you will appreciate the merits of Critical Illness Insurance.
What illnesses are classified as Critical Illnesses?
Some Insurance Companies offer two different two levels of cover. Standard Critical Illness Cover (sometimes known as 'Basic Cover') and Comprehensive Critical Illness Cover.
Standard Critical Illness Cover covers illnesses that are usually terminal.
Comprehensive Critical Illness Cover includes a wider list to include serious conditions
that might not necessarily be terminal but which would certainly prevent you from working
normally.
The following list is typical of the critical illnesses included within Comprehensive Critical Illness Cover. Lists do vary between insurance companies but will typically include the following: -
- Alzheimer’s disease
- Angioplasty
- Aorta graft surgery
- Aplastic anemia
- Bacterial Meningitis
- Benign brain tumour
- Blindness
- Cancer
- Coma
- Coronary artery by-pass surgery
- Creutzfeldt-Jakob disease
- Deafness
- Dementia
- Heart attack
- Heart valve replacement or repair
- HIV or AIDs from an assault, blood transfusion, occupational duties or accident
- Keyhole heart surgery
- Kidney failure
- Loss of independent existence
- Loss of limbs
- Loss of speech
- Major organ transplant
- Motor Neurone disease
- Multiple Sclerosis
- Paralysis/Paraplegia
- Parkinson’s disease
- Stroke
- Third degree burns
- Total permanent disability
- Cover for children
What does “survival period” mean?
In order to claim under Critical Illness insurance you have to survive for a minimum number of days – this is known as the “survival period”. It is normally 28 days following diagnosis but we are aware that some Insurance Companies have reduced this to 14 days. Please check the booklet which will accompany your application form. The important point is that if you die within the survival period you cannot claim.
Employment Cover
When you buy Critical Illness Insurance you may also have to decide what type of “employment
cover” you want. Before the Insurance Company will pay out, they will need to confirm
that the illness prevents you from working.
The question is what type of work does your illness prevent you from following?
Within our life insurance company panel, there are normally three alternative definitions of being “out of work”: -
- Critical Illness that stops you from following your own existing occupation. This is the most expensive option.
- Critical Illness that stops you from taking any job. This is the cheapest option.
- Critical Illness that stops you from taking any job to which you are suited. This is priced between the previous two options.
If you find that Scottish Provident provides you with the cheapest quotation, you should be aware that they use a different system of assessing whether you are fit to work. They call it “Work Tasks and Life Tasks”. Basically Scottish Provident lists six “work tasks” (such as talking and walking) and six “life tasks” (such as feeding and washing). If you are unable to carry out any two tasks from the “work tasks” or any three from the “life tasks” then your critical illness qualifies for a claim. Full details are in their booklet that will be sent to you if Scottish Provident gives you the cheapest quote.
What is Terminal Illness Insurance?
Terminal Illness Insurance will pay out if you are diagnosed with an illness from which you are expected to die within 12 months of diagnosis.
This type of insurance is included free of charge with all the Life Insurance policies we sell. Insurance companies do not offer Terminal Illness Insurance solely by itself.
But please be aware, Terminal cover is not the same as Critical Illness cover. The essential difference is that Critical Illness pays out if you are diagnosed with a serious illness that is included within your policy’s list of defined critical illnesses and there is no defined survival period. You do NOT have to be expected to die within 12 months of diagnosis - and there are many serious illnesses that fall into that category. For example, deafness, multiple sclerosis and dementia.
The following Frequently Asked Question is related to the above topic. Click here if
you wish to read it:
What is Critical Illness Insurance?
What is the difference between Terminal Illness Cover and Critical
Illness cover?
What is the difference between Terminal Illness Cover and Critical Illness cover?
Terminal Illness Insurance pays out if a Doctor diagnoses you with an illness from which the Doctor expects you to die within 12 months.
Terminal Illness Insurance is included free of charge with all the Life Insurance policies sold by ClickLife.
But Terminal cover is not the same as Critical Illness cover.
Critical Illness pays out immediately you are diagnosed with any serious illness that is included within your policy’s list of defined critical illnesses.
The essential difference between Terminal cover and Critical Illness cover is that Critical Illness pays out if you are diagnosed with any serious illness that is included and there is no defined survival period. You do NOT have to be expected to die within 12 months of diagnosis.
You will see from the typical list shown below that there are many critical illnesses where you could be expected to survive or many years. (For example, dementia and blindness.)
It is a fact that 35% of men and 46% of women who develop cancer survive at least 5 years and that 78% of stroke victims survive at least a year. If you had one of these illnesses and the Doctor expected you to live more than a year, you would be unable to claim under Terminal Illness cover but could claim under Critical Illness cover.
We hope you will now understand the merits of Critical Illness Insurance and the difference between it and Terminal Illness Insurance.
The list shown below is typical of the critical illnesses included within Comprehensive Critical Illness policies. (Important: lists of critical illnesses do vary between insurance companies so please check the booklet which will accompany your application form.)
- Alzheimer’s disease
- Angioplasty
- Aorta graft surgery
- Aplastic anemia
- Bacterial Meningitis
- Benign brain tumour
- Blindness
- Cancer
- Coma
- Coronary artery by-pass surgery
- Creutzfeldt-Jakob disease
- Deafness
- Dementia
- Heart attack
- Heart valve replacement or repair
- HIV or AIDs from an assault, blood transfusion, occupational duties or accident
- Keyhole heart surgery
- Kidney failure
- Loss of independent existence
- Loss of limbs
- Loss of speech
- Major organ transplant
- Motor Neurone disease
- Multiple Sclerosis
- Paralysis/Paraplegia
- Parkinson’s disease
- Stroke
- Third degree burns
- Total permanent disability
- Cover for children
The following Frequently Asked Question is related to the above topic. Click here if you wish to read it: What is Critical Illness Insurance?
What illnesses does Critical Illness Insurance cover?
The following list is typical of the illnesses included within Comprehensive Critical Illness policies. (Please be aware that the lists of qualifying critical illnesses do vary between insurance companies - so please check the booklet that will accompany your application form.)- Alzheimer’s disease
- Angioplasty
- Aorta graft surgery
- Aplastic anemia
- Bacterial Meningitis
- Benign brain tumour
- Blindness
- Cancer
- Coma
- Coronary artery by-pass surgery
- Creutzfeldt-Jakob disease
- Deafness
- Dementia
- Heart attack
- Heart valve replacement or repair
- HIV or AIDs from an assault, blood transfusion, occupational duties or accident
- Keyhole heart surgery
- Kidney failure
- Loss of independent existence
- Loss of limbs
- Loss of speech
- Major organ transplant
- Motor Neurone disease
- Multiple Sclerosis
- Paralysis/Paraplegia
- Parkinson’s disease
- Stroke
- Third degree burns
- Total permanent disability
- Cover for children
The following Frequently Asked Question is related to the above topic. Click here if
you wish to read it: -
What is Critical Illness Insurance?
What is Term Insurance?
Term Insurance is also known as “Life Insurance”. There are no differences between them.Term Life Insurance pays a lump sum to you or your family if you die. It is
so called because the policy only remains in force for a pre-determined period of time – its’ “term”.
The lump sum payout is free from income tax and capital gains tax but the money could be caught by Inheritance Tax within your estate. However, you can esure that the lum sum is not caught by Inheritance Tax by getting your policy "Written in Trust". Your Consulatant can organise this for you and it's a free service.
You decide at the outset of the policy how long you wish its cover to last. Most policies are taken out for between 20 and 25 years but you can have one for as short a period as 7 years. But whilst all insurance companies will provide cover to age 65, few will provide cover beyond. Age 70 is probably the oldest age you’ll find cover for and even then, it will be very expensive.
The following Frequently Asked Questions are related to the above topic. Click here
if you wish to read them: -
What is Life Insurance?
What is Mortgage Life
Insurance?
What is Level Term Insurance?
What is Decreasing
Term Insurance?
What is the difference between Life Assurance and Life Insurance?
Lots of people don’t understand the important difference between Life Insurance and Life Assurance but really it’s quite simple:
Life Assurance includes an important investment element within the policy. A Life Assurance policy combines a none guaranteed investment with a guaranteed insured sum. The value of the investment is then directly related to the size of the sum guaranteed on your policy, the number of years you have had the policy and Insurance Company’s investment performance.
If you were to die whilst your Life Assurance policy was in force, the policy would pay out the guaranteed sum (just as with Life Insurance) or the value of the annual investment bonuses that had been added to the policy by the Insurance Company to date, whichever was the greater. { mortgage explorer } Consequently, as the years go by, the Life Assurance policy increases in value as its bonuses build up.
Then if you survive to the end of the policy, you normally get an investment bonus called a terminal bonus. The payout is then the sum of all the annual bonuses plus the terminal bonus.
When a Life Assurance policy has accumulated an investment value through its annual bonuses, you can cash it in. Your insurance company will in effect, buy it back from you. However, many policyholders get a far higher price for their policy by offering it to a specialist investment broker. You’ll find details on the Internet of investment brokers who’ll handle the sale of your life assurance policy for you.
Life Insurance is different. It always insures you for a specific period of time and never has any investment value. If you die whilst the policy is in force, the insurance company pays out. However, if you live to the end of the policy, the policy is finished and has no value whatsoever. Even whilst the Life Insurance policy is in force, it only has a value if there’s a claim – in that context it’s just the same principle as your car insurance.
In recent years, mortgage Life Assurance policies have provided disappointing investment returns. Returns on have dropped very significantly reflecting investment conditions. Furthermore, some insurance companies still place penalties for early encashment. As you would expect, this has reduced the resale value of Life Assurance policies.
Life Insurance is a much cheaper product than Life Assurance. These days most people elect for Life Insurance but if you are in any doubt whatsoever, you should discuss your position with the adviser from ClickLife.
What is Whole of life Insurance?
A Whole of Life policy is a specific kind of Life Assurance.
The primary difference between Whole of Life and standard Life Assurance, to which it is related, is that with Whole of Life, there’s no “term - the policy is in force for as long as you live and pay the premiums. That is why it is called Whole of Life!
In all other aspects, Whole of Life operates the same way as Life Assurance. { mortgage trail }
There is one other point you should be aware of. You can cash them in with the insurance company but there is no investment resale market for Whole of Life policies.
The following Frequently Asked Questions are related to the above topic. You may care
to read them: -
I have a Repayment Mortgage.
What sort of life insurance do I need?
I have an interest only
mortgage. What sort of life insurance do I need?
What is the difference between Life Assurance and Life Insurance?
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