18 November 2018Last updated


Critical illness cover

Wealth and wellness coach Rasheda Khatun gives us the lowdown on the insurance policies you should have in place to protect your family in case one of you becomes ill

Rasheda Khatun
2 Oct 2016 | 10:00 am
  • Source:Supplied

Some common, but rather alarming, statistics: you’re seven times more likely to suffer a critical illness than you are to die before the age of 65. Currently, one in three people will develop some form of cancer in their lifetime. The British Heart Foundation estimates that around 50,000 men and 32,000 women suffer a heart attack each year in England. Almost one in three people will lose around Dh5,000 per month in earnings – if not all of their income – because they are unable to work or have to cut down their hours as a result of a critical illness diagnosis. Scary? Well, the good news is that more and more people each year are surviving critical illnesses; the general trend of surviving cancer is growing each year, while around seven in 10 survive a heart attack. But back to the less positive news… Recovering from a critical illness can be a long, slow process and living with the effects of such an illness can mean a complete change in lifestyle. Your regular bills will still need paying, you and your family will still need to be taken care of financially. So, what to do? This is where critical illness cover comes in.

Pick your policy

Critical illness cover, or critical illness protection, is an insurance policy that pays out a lump sum when you’re diagnosed with a critical illness. Examples of such an illness include heart attack, stroke, cancer, a terminal illness and Alzheimer’s disease, although lists change over time.

In theory, anyone over the age of 18 can apply for critical illness cover, although some providers cover children too. Policies normally cease when the insured reaches the age of 65. Insurers can and do insist on exclusions, and some applicants are even declined because of the risk to the insurer based on that person’s medical history.

If you’ve already suffered a critical illness, your provider will assess the risk and may exclude this illness from any future claim.

When assessing an application and deciding on the premium, insurers use a standard rate based on your age and gender. Then, once you’ve completed your medical history, underwriters will assess the risk you pose to them based on your state of health. If the risk is higher than average, they’ll probably load the premium – or add on an amount – so they can still provide cover.

Ideally, you should have both a life insurance policy and critical illness cover as they’re equally important in different ways. If you’re without either policy in place, it’s easiest to set them up together, but if you already have life cover with no critical illness, you can always add critical illness cover later.

To choose the right policies for you, in my view, it’s best to talk to an independent insurance adviser as they won’t be tied to any particular provider and can advise you on the best policy for your needs. To find an adviser, talk to friends, ask for recommendations, do some research online.

You’ll need to remember a couple of things in order to make sure you’re setting up the right policy and it’ll pay out if you need to make a claim. Firstly, before you sign any policy documents, go through the list of critical illnesses the insurer provides. Every insurer has a set list and, although most are the same, there could be a few differences. Make sure you understand the definitions, and understand under what circumstances they could refuse to pay a claim. Then, make sure you’ve been completely honest on the application form and given your full medical history. The most common reason for non-payment of a claim is due to non-disclosure on the application form; even if you think a piece of information isn’t relevant, be upfront and mention it.

In order to arrange the right amount of critical illness cover, you’ll first need to establish what you’ll actually need the lump sum payout for. Ideally, critical illness protection should be there to cover loss of income each month but, if your medical insurance isn’t likely to cover all expenses associated with a critical illness, you’ll also need to factor in any potential shortfall there to ensure you’ll be adequately covered for both elements.

Then, work out your potential loss of income. A good rule of thumb is to cover yourself for three years’ worth of your salary, as your employer may well only carry on paying you for one to three months. Finally, add in any lump sum you might need if your current medical insurance cover could be limited. You’ll then be able to work out the amount of cover you need, and your adviser can get quotes based on this figure so you can establish whether the premium is affordable. Remember, although it may seem expensive, it’s a vital part of your protection and a necessary cost.

Rasheda Khatun

Rasheda Khatun