There are several forms of personal protection available from various insurance companies. The commonest forms of protection that most people consider are private health/medical, life insurance and term critical illness insurance. Essentially, life insurance and critical illness cover are similar in that they both will pay out a tax-free cash lump sum should the policyholder either die, as with the life insurance plan, or, if they were diagnosed with a specified critical illness that was covered on their critical illness policy. All conditions on a critical illness policy are clearly defined as to when a claim will pay out on any specified condition. These definitions were standardised by the Association of British Insurers (ABI) in an attempted to provide clarity to the consumer and enable the policies, available from the various insurance companies, to be easily compared. For any claim to be paid out the diagnosis of the illness has to fulfil the definitions for that particular condition.
Critical Illness Policy - Critical Illness Insurance Policy - Critical Illness Cover Policy
Generally, about 90% of all claims on a critical insurance cover are successfully paid out to the policyholder. There are typically two main reasons why a claim could be classed as invalid; the first one is that the condition does not meet the full definitions required for that particular illness. The other reason for refusal to pay out, which could be considered even more devastating for the claimant, is down to nondisclosure of information.
At the point of applying for a critical illness plan the applicant is required to complete an application form providing various details, these will include;
- Lifestyle, leisure pursuits etc
- Occupation
- Health
- Family health
For the insurer to accurately assess the risk involved in providing the critical illness cover being applied for, all the questions need to answered clearly, precisely and more importantly honestly. If there is any doubt about informing the company of anything the best advice would be to include the information. At a later date if a claim is made and it comes to the insurers attention that certain information was not disclosed this would be classed as nondisclosure and the critical illness policy will be classed as being invalid.