Critical illness insurance pays a lump sum on initial diagnosis of a serious medical problem. You are permitted to keep the money even if you make a full recovery.

It can be incorporated into another life insurance policy on a level term or whole of life basis, or as a stand alone policy. Once you have made a critical illness claim it is unlikely that you will be able to get further cover elsewhere in the future.

Policies vary but nearly always include the following illnesses; heart attack, cancer, a stroke, kidney failure, coronary bypass or transplant. Most policies also pay out if an accident or illness prevents you from being able to return to work. For an additional cost, more comprehensive cover can be obtained that will insure you against a greater number of illnesses.

Well over half of claims result from cancer or a heart attack. Visit claim profile in order to see a more detailed breakdown of the reasons for life insurance claims.

Critical illness policies can be split into two types as described below:

'Death OR Earlier Critical Illness' - pays on either death or critical illness but not both.

'Death AND Critical Illness' - pays on critical illness and death. Once a claim has been made against a critical illness, further critical illness claims cannot be made.

Additional options and areas for consideration include:

• Which Critical Illnesses are Covered: Two levels of cover are normally available. The first covers the major conditions as detailed above, the second offers more comprehensive cover that includes more conditions.
  
  
• Permanent Total Disability: if this is not included you will be unable to claim if an illness or accident leaves you unable to work. Also, check the definition of 'permanent total disability'. Some policies define it as being unable to perform any job whilst others define it as being unable to continue in your previous occupation. The latter is more favourable.



• Survival Period: most policies require you to survive for a specified period following a critical illness diagnosis, typically 14 days to 3 months. The shorter this required period the better.



• Children: some policies will pay out if your children are diagnosed with a critical illness.



• Waiver of Premium: if illness prevents you from working your monthly premiums are paid on your behalf for a predetermined period. Check your policy for the permissible period of premium non payments. more



• Counselling: counselling may be included to help your family cope with your illness.

The terms and conditions of policies vary, so make sure you understand the scope of the cover being offered before committing yourself.