What Happens When You Apply for a Critical Illness Policy?

Being diagnosed with a critical illness can be an extremely difficult time in someone's life, but it can also be very taxing financially for the sufferer and their family. In addition to expensive treatment, you and your dependents would also have to contend with the fact that you would lose your main (or only) source of income. Critical illness cover enables you to guard against the financial hardship that would result from suddenly losing your financial stability as a result of serious illness.

This type of cover would pay out a tax-free lump sum of cash upon diagnosis, which you could then use to replace your income, pay off outstanding debts such as a mortgage and cover the costs of your treatment. It's important to take note of the range of illnesses that are covered before signing up to a policy – insurers will usually have a list of what is and is not included. You also have to take note of any special circumstances that would preclude a payout, such as failing to take the advice of your doctor, or self-inflicted illnesses resulting from, for example, drug abuse.

Critical illness cover is a typical complement to a life insurance policy. Insurers will often offer critical illness as an add-on to a decreasing term life insurance policy, since this offers an extra guarantee of being able to pay off a large loan such as a mortgage or continue to pay for your children's education in the event of losing your income through illness. Of course it can also be taken out in accordance with a whole of life policy, to give you the peace of mind of knowing that your family is protected over a longer period of time.

Before taking out critical illness and life cover, you will be required by the insurer to take a medical exam, as this will help them assess the risk of covering you. If you have a higher risk of developing a critical illness, either due to your lifestyle or your medical history, it's likely that your premiums will be more expensive. However, you should never withhold information for the sake of getting cheaper premiums. It's crucial that when you fully disclose all details about your medical history, because if you omit anything that may affect your health at a later date, there is a strong chance that your critical illness and life cover claim will be voided and the insurer will not pay out.