How would you cope with a serious illness?

Critical illness or Serious Illness can be added to life assurance cover.These are designed to pay a lump sum when you contract any one of the serious illnesses/medical conditions described in the policy conditions. You must be aware that each insurer will have its own restrictions, conditions and exclusions which apply to its serious illness policies.

The serious illness benefit may be payable as an additional benefit to the life cover (this is known as Stand Alone Cover) or as an accelerated payment of the death benefit (Accelerated benefit). With the Stand Alone cover if a serious illness benefit was paid you would also continue to be covered for the life assurance benefit. This would be paid on your death up to the expiry of the policy.

Under the accelerated cover option, the death benefit will be reduced by the amount of any serious illness benefit paid to you. The cost of accelerated cover is therefore cheaper as the total amount possibly payable is less than under the stand alone option.

It is important to realise, when you consider this type of cover, that it would not replace your income if you were out of work because of a long-term illness. This is because some illnesses may be serious enough to prevent you from working full-time but are not covered by serious illness policies. Even where the illness is covered, the policy pays a once-off lump sum and not an on-going income.

Permanent total disablement (PTD) is sometimes included in these policies. So, if you become permanently and totally disabled from an illness or condition that is not otherwise covered by the policy, you could claim the serious illness benefit.