Critical illness insurance is meant to give you a lump sum if you are diagnosed with one of a list of illnesses that are listed in the policy documents.
There are a lot of different lengths of lists, with some covering as few as eight illnesses and one covering an amazing 140. This is a slightly different version that pays different amounts based on how bad the illness is. On all of the lists, heart disease and cancer are at the top. Not many policies will cover stress-related or mental illnesses. Problems with the back are also rarely covered.
Some people think critical illness insurance is important and like the peace of mind it gives them. However, it is interesting to note that a lot of claims are denied. Most people think that this number is 20%. Most of the time, this is because someone didn't tell them about a previous illness. Insurance companies are allowed to do this, and if you make a claim, the first thing the insurance company will do is ask for your full health records. They will look at these very carefully, and if they find proof that you didn't tell them about a previous illness or condition, even if you don't think it has anything to do with the current one, they can legally refuse to pay out on the claim. The law makes it clear that if a customer doesn't give the insurer the information they asked for, the insurer can cancel the policy.
This means that if you don't tell the insurance company about even small health problems when you apply for critical illness coverage, the whole policy won't be worth the paper it's written on.
This seems like a situation that can't happen. Small illnesses that you thought you were over may come back to haunt you. Can you remember the "weird" things that happened during your pregnancy? Your blood pressure may have gone up, and you may have had the usual pregnancy symptoms like morning sickness, backaches, and "gestational diabetes." This happens a lot. Most of the time, the problem goes away on its own and never comes back. Years from now, you might decide to get critical illness insurance. Do you even remember the problems you had during your pregnancy, let alone think they could help with an illness that has nothing to do with pregnancy? But this failure to tell could be why an insurer won't pay out for a later critical illness that has nothing to do with the first one.
How often do you leave the doctor's office with a handful of pills and no idea what the real name of the problem is that you're being treated for? It will be in your records, but who can honestly say that they remember and write down every small illness after years have passed and the problem has been fixed?
If the Financial Ombudsman Service gets involved in a disagreement about non-disclosure, they will try to find out if the consumer lied on purpose or if they left out information because, for example, the questions on the proposal form were not clear.
One way to make things better would be for insurers to do more thorough checks before giving out coverage, or for them to agree not to look through medical records if a claim is made after a reasonable amount of time.
If you're thinking about getting critical illness insurance, it's important to read the policy carefully and make sure you tell the truth, the whole truth, and nothing but the truth. Don't make the final decision to go forward until you're sure that your choice of insurer is the best one.
An online broker can give you lots of advice and a variety of policies to choose from. There are also discounts you can only get on the Internet.
