Pulse Independent Insurance and Financial Advisers is a trading name of -
R J Hurst & Partners Ltd, authorised and regulated by the Financial Services Authority
Registered in England (No: 492768) at 131.133 New London Road, Chelmsford, Essex.
CM2 0QZ.
Directors: G.M. BERNCASTEL | J.T. BUGDEN | R. MCEWEN | S.A. SMITH
Critical Illness Cover
Critical Illness Cover Policies will make payment of a lump sum in the event of diagnosis of one of a number of specified critical conditions. There are, in general, a core of conditions that are covered by all Companies who provide this type of Policy.
For 23 of these conditions the ABI have set down specific definitions, so if that particular condition is included, you have the knowledge that whichever Company you proceed with, the minimum cover provided will be the same. The Companies can; however, expand upon those definitions to make their cover more attractive, should they wish to.
In addition to these core conditions, which tend to include the likes of Cancer, Heart Attack, Stroke, Alzheimers, Kidney Failure and Multiple Sclerosis, most Companies will include additional cover that they feel adds benefit to their Plan. Please ensure that you read the Individual Company literature closely to be sure that the Plan you proceed with provides the cover you require.
It is possible to take out Critical Illness Cover on a number of different basis, we have included details of the options, within the notes below.
Renewable Term: Provides protection for a specified period chosen by you at outset, usually limited to 5 or 10 years. The benefit level is fixed, unless an Indexation option is included, and becomes payable shortly after diagnosis of one of the specified critical conditions within the term. Upon no claim having been made at the end of the term there is an option to continue cover for a further period of time, free from the provision of further medical evidence. Premiums would be adjusted to be appropriate to your age, benefit level and the underlying premium rate at that point. There is no cash value under the Plan. Premiums can be paid on a guaranteed or reviewable basis.
Mortgage Protection: Provides protection for a specified period chosen by you at
outset. The benefit level reduces throughout the term and shortly after diagnosis
of one of the specified critical conditions within the term, the sum assured applying
at that time would become payable. This Plan would usually be taken out in conjunction
with a re-
Family Income Benefit: Benefit is taken out for a specified term at outset. The benefit level is fixed at outset, unless an Indexation option is included, and becomes payable shortly after diagnosis of one of the specified critical conditions within the term. The benefit would then be payable for the remainder of the term either on a monthly or annual basis. Some Companies will allow the remaining benefit to be paid as a lump sum, but the Plan is essentially designed to make regular payments. Upon no claim having been made at the end of the term, cover ceases with no options and no cash value. Premiums can be paid on a guaranteed or reviewable basis.
Whole of Life (Lifetime): Provides cover for the whole of your life with the lump
sum benefit being payable shortly after diagnosis of one of the specified critical
conditions. An initial benefit level is chosen at outset, but it will depend on which
basis the Plan is arranged as to whether this remains at this level, and indeed whether
an Indexation Option is included. Cover can be taken out on either a Guaranteed or
Unit-
Guaranteed: Both the benefit level and premium are fixed throughout the lifetime of the Policy, unless an Indexation option is included. The benefit level then becomes payable shortly after diagnosis of one of the specified critical conditions.
Unit Linked: The benefit level is taken out at the required level at outset. Premiums are used to purchase units in an underlying fund which are then encashed to cover the cost of providing the critical illness cover. The premiums would be reviewed during the lifetime of the Policy, whether or not an Indexation option is included, and you may find that either your premium will need to increase or your benefit level reduce, dependent on which basis you proceed with at inception.
Maximum Sum Assured: The premium is set at a level that will maintain the chosen benefit level for the first 10 years of the Policy. At the 10 year point the Plan will be reviewed and either premiums will need to increase, sometimes substantially, to maintain the benefit level, or the benefit level would be reduced to a level that the premium would still be able to sustain. This provides the maximum level of cover for the minimum cost during the initial 10 year period. The Plan will then be reviewed at regular intervals thereafter and further alterations may be needed to maintain the chosen benefit level, although any increases should not be to the same extent as the initial 10 year review.
Standard/Balanced Sum Assured: The Insurance Company calculate the premium they believe will maintain the critical illness cover chosen throughout the lifetime of the Policy, assuming that an underlying growth rate is achieved. They will review the Plan at year 10 and should the assumed growth rate not have been achieved, your premium will need to increase. Alternatively, you can opt to reduce your benefit level to be appropriate to the premium being paid. The initial premium under this basis is higher than that for the Maximum Sum Assured, and so any amendments should not be as great. The Plan will then be reviewed at regular intervals to ensure that the premium being paid is still appropriate to the level of benefit held.
Specified Sum Assured: Under this basis, benefit and premiums are set at a level somewhere between that for the Maximum and Standard Basis. In this way, at the initial 10 year review, any amendments should not be as great as under the Maximum Sum Assured basis, whilst your premiums are lower than they would be under the Standard/Balanced basis. The plan is then reviewed on a regular basis to ensure that the premium being paid remains appropriate to the benefit level held.
Level Term : Provides protection for a specified period chosen by you at outset. The benefit level is fixed, unless an Indexation option is included, and becomes payable shortly after diagnosis of one of the specified critical conditions within the term. Upon no claim having been made at the end of the term cover ceases with no options and no cash value. Premiums can be paid on a guaranteed or reviewable basis.
Premiums :
Guaranteed premiums will not change throughout the time you hold your policy, unless you have index linked benefits.
Reviewable premiums will start out lower, but are reviewed regularly and are likely to increase over time with no guarantees as to by how much.
Waiver of Premium: This option can be chosen at outset and means that, for an additional premium, in the event that you are unable to work due to accident or illness, and subject to the individual Insurance Company’s Terms and Conditions, your premium would be paid for you until such time as you are able to return to work and recommence payment yourself.
Indexation of Benefits: Although you can opt for level benefits, choosing to include indexation will help to offset the effects of inflation as benefit levels will rise each year by the level specified by the individual Company. Frequently this will be in line with RPI, subject to a maximum level. Premiums will also increase.
Life Cover: Payment in the event of death can also be included with the majority of the aforementioned Plans. This can either be on a First Event Basis i.e. payment made upon the first to occur, with cover then ceasing; or on a Both Events Basis i.e. if you are diagnosed with a critical illness payment a lump sum benefit is made, and then a further payment is made upon death – subject to the Individual Policy chosen at outset and the terms that apply.
Cover Buyback: Should you make a Critical Illness Cover claim, it is usually very difficult to then get further cover. If you choose this option at outset; however, for an additional premium, you have the knowledge that should you make a claim, you will be able to take out further Critical Illness Cover, subject to Company Specific limitations.
Total Permanent Disability: This option is available for an additional premium and will make payment of the chosen benefit level in the event that you become disabled and totally and permanently unable to work again. Some Companies will make payment under this option should you be unable to carry out your own occupation, whilst some will have a broader definition in that you must be unable to carry out any occupation to which you are suited. In some cases, Activities of Daily Work/Living (ADL’s or ADW’s) will apply. This means that you would be assessed as to whether you are able to carry out a number of specified tasks, such as washing, walking, bending or communicating. Please ensure you read Individual Company literature closely so that you are aware of which will apply to yourself should you proceed.
Guaranteed Insurability Option: This option allows you to increase cover free from the provision of further medical evidence in certain circumstances e.g. moving house, having a child. Certain conditions apply and you should read the Individual Company literature closely.
Trusts: Whereas under a Policy that provides Life Cover only you may wish to place your Plan in trust so that benefits become payable to a nominated beneficiary in the event of a claim, under a Critical Illness Cover Plan you would want the benefits payable to yourself and it would not necessarily be appropriate to place your Plan in Trust. If you have an element of Life Cover; however, you can have a split Trust that will ensure that any Critical Illness benefits are payable to yourself, whilst the Life Cover benefit would be payable to your nominated beneficiary. Please see our Trust pages for further information.
Other options may be available and depend upon which Company you proceed with. Please ensure that you read the supporting Company Literature closely.
Pulse Independent Insurance and Financial Advisers is a trading name of -
R J Hurst & Partners Ltd, authorised and regulated by the Financial Services Authority