Critical Illness Articles
How Critical Illness Has Evolved and Improved Since the 1990s
Critical illness cover has seen its share of proponents and opponents since it was first introduced to the UK in the 1990s. By the time the 21st century arrived, people saw the value of obtaining financial protection against a dread disease that disabled them from working.
The Criticisms Surrounding the Early Critical Illness Industry
However, as more and more people bought critical illness covers, it became very clear that insurance companies only paid for an “all or nothing” condition. Those insured with treatable forms of cancer and heart disease were declined benefits, and insurers suffered the wrath of the consumer.
The disparity in claim payout was evident as well. Some policyholders who became seriously ill did not qualify for a benefit because their condition fell outside an acceptable form, while others who seemed not despondently sick received full benefits.
As an example, a woman with early detected form of non-malignant breast tumor may have to undergo multiple surgeries to remove the lump, plus radiotherapy treatment for months afterwards. However, since her form of cancer is treatable and a full recovery is expected, she would not be eligible for benefits, even though she could not work while being treated.
Another woman may be diagnosed with multiple sclerosis, which is a progressive neurological disease. Because there are advanced forms of medication that can prevent or slow progressive nature, the woman can continue leading a full life for years to come. However, she is eligible for a full critical illness benefit.
The Financial Services Authority even voiced concern that consumers were confused about critical illness policies and did not understand the limitations and exclusions of conditions.
Recent Changes Improving Critical Illness Cover
Insurance companies decided to make a change in how critical illness covers were perceived and how they offered plans. Led by Prudential, critical illness covers were redesigned to allow policyholders much more flexibility in receiving benefits.
Rather than a full benefit for an “all or nothing” condition, Prudential introduced a critical illness cover plan that included a graded form of payout depending on the seriousness of the conditions. The resulting plan included more than 140 covered conditions, compared to an average of about 35 conditions on a normal critical illness cover.
This type of graded payout allows insurance companies like Prudential to make more partial benefit payouts to claimants. For instance, say an insured becomes blind in one eye. A normal critical illness cover only pays a benefit if a policyholder is completely blind in both eyes. However, the new form of policy could pay a 25% benefit for the disability.
The new flexible plans of critical illness do come at a cost. The premium amount of for a flexible and partial payout plan is almost twice as expensive as a normal critical illness cover. Before you choose a policy, check with a financial advisor as to whether a critical illness cover is the best form of income protection for your needs.
 |
|