Drewberry Insurance: Critical Illness Cover Still Too Complicated Relative to Income Protection

March 26, 2011 - PRLog -- Critical Illness Insurance (CIC) policies can be particularly helpful and some say vital, to protect a family in the event of a life-threatening illness.  Unfortunately, there has been a prevalent theme in these policies where insurers often use jargon that is only really readable by medical professionals.  

It is imperative that caution be used when buying critical illness cover as these plans are limited in the number of conditions they cover, even for certain types of cancer. For people in clerical occupations income protection insurance (http://www.drewberryincomeprotection.co.uk/) is far more straightforward, covering practically any medical complaint that prevents the policyholder from working in their ‘own occupation’.

Too Much Critical Illness Jargon

Taking out a critical illness plans can be very daunting, primarily because the medical jargon used in the policy wording can confuse consumers significantly.  Unfortunately, the wording and underwriting involved with these policies can be so specialised and complex that consumers may expect a payout when, in all actuality, the terms of the policy means that their condition qualify.

Quite a few agencies only provide potential critical illness policy buyers with a broad overview of the coverage that can be expected, without revealing precise underwriting definitions or exclusions.  According to the Association of British Insurers, their definition indicates that this type of cover is designed to payout upon receiving a diagnosis of a listed critical illness.  They further indicate that this list must include stroke, heart attack and cancer, but not all forms of these conditions.

It is typical that insurers will then add conditions to their listing of medically accepted critical illness conditions.  Some policies can list as many as 40 of these conditions but some may be the same form of a critical illness separated out into individual parts.  For example, Alzheimer’s, pre-senile dementia and dementia, even though they are predominantly defined the same, are counted as separate conditions in many policies.

One persistent problem is that many plans come with small print that requires knowledge of medical terminology.  There have been plenty of cases where policies do not only vary greatly in coverage, the definitions are so confusing that claims could be denied because the condition is the wrong sort, such as the wrong type of heart attack and types of strokes that are not considered serious enough. Some plans even include upper age limits for certain types of conditions, such as Alzheimer’s disease.

Income Protection Is Far More Inclusive

Another type of cover to consider is Income Protection Insurance (IP).  This policy can be used as an alternative to critical illness insurance because income protection will payout on non-critical conditions, such as for back problems or stress-related illnesses, provided that the condition prevents the policyholder from working.

Although this type of cover is available to almost everyone it is particularly popular with company directors of small businesses who often do not have any sick pay or company provided insurance benefits (guide to directors income protection: http://www.drewberryincomeprotection.co.uk/income-protect...).

Senior adviser at Drewberry Income Protection, David Swan, argues that “While critical illness plans can be very useful if a very serious condition is suffered there are too many gaps in protection whereby the individual is too unwell to work but not unwell enough to make a claim, which naturally causes financial distress and understandable anger for someone who’s been paying premiums every month for the cover not to payout when they feel they need it most. For this reason income protection cover is an attractive alternative”.

For most office based workers an ‘own occupation’ definition for the plan can be used which essentially means that policy will payout for practically any health condition that prevents the policyholder from working in their exact job, after a deferred/waiting period has been seen out.

For more information on the difference between the cover provided between critical illness and income protection please see the following guide:
http://www.drewberryincomeprotection.co.uk/insurance-news...

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Drewberry Income Protection is a London based insurance brokers for income protection and payment protection insurance. The company is part of the Drewberry Insurance group.