Serious illness cover pays a tax free cash lump sum if you are diagnosed as suffering any illness from a specific list of illnesses that the relevant life company provides. Typically the major conditions covered include certain types of malignant cancer, heart attack, stroke and multiple sclerosis. It is also called Critical Illness cover.
The purpose of Specified Serious Illness Cover is to provide a lump sum if you are diagnosed with one of the specified serious illnesses covered during the term of the policy. A claim will only be paid based on the Specified Serious Illness Cover Definitions which state the exact conditions which must be met for a claim to be paid.
It can be taken out on its own or you can add it to your Life Cover policy or your Mortgage Protection policy.
Some providers will also provide partial cover for certain illnesses. For example Royal London cover 51 specified serious illnesses and also provide cover under their Partial Payment Specified Serious Illness Cover for an additional 22 specified illnesses.
It is cover that merits serious consideration when one considers statistics like the following:
- There is a 1 in 4 chance of females getting cancer and that rises to 1 in 3 for males.
- Each year in Ireland there are over 20,000 new cases of cancer.
- 60% of patients diagnosed with cancer in 2008 were still alive 5 years after diagnosis.
- Each year approx. 10,000 Irish people have a stroke.
- An estimated 30,000 people are living in the community with disabilities as a result of a stroke.
There are a number of ways this type of cover can be set up.
Stand Alone: - This is simply where the policy is established on its own with no life cover attached.
Standalone Life & Serious IIlness Cover: – This is where you combine it with an element of life cover so that a lump sum is paid out if you either die or are diagnosed with a critical illness that meets the definitions under the relevant life policy.
Accelerated Life & Serious Illness Cover: - This type of plan provides Life and Serious Illness Cover. After a Serious Illness claim, your Life Cover is reduced by the amount of the claim. The policy will cease in the event that a Serious Illness claim reduces your Life Cover to zero. In the event that you die before a Serious Illness claim, the death benefit will be paid provided this occurs within the term of the policy, and the policy will cease.
You can also include Serious Illness cover with your mortgage protection policy on an accelerated basis. In the event of a serious illness claim the payment would be made to the lender against the mortgage.
Like Life Insurance, your serious illness cover can be for one or two people; i.e. a Single Life Basis, Joint Life Basis or Dual Life Basis.
Single Life Serious Illness Cover
This is taken out by one person and is payable if you suffer from one of the defined list of serious illnesses. It is very important to read the relevant life company serious illness guide outlining the definitions of serious illnesses covered.
Julie takes out a Life & Serious illness policy for € 100,000 for 20 years. During the term, Julie suffers from one of the defined serious illnesses. €100,000 is paid to Julie. The policy then ceases.
Joint Life Cover
As it suggests joint life serious illness cover is taken out for two people and is payable if one of the lives insured suffers from one of the defined list of illnesses. As there is only the potential for one payout, there can only be one sum insured, i.e. the two lives cannot be covered for different amounts. Once a claim is paid, the policy ceases. Likewise, if neither person suffers from a serious illness during the term of the policy, the policy will cease. There is no cash value attaching to this type of protection policy.
Julie and Andy take out Life & Serious Illness cover of € 100,000 on a joint life basis for 20 years. Andy suffers from one of the defined serious illnesses in year 15 and €100,000 is paid out. The policy then ceases
Dual Life Cover
Similar to Joint Life, this is taken out by two people. The fundamental differences are that:
1. Both lives can be insured for different amounts of cover.
2. There is the possibility of two payments.
Julie & Andy have a dual life policy for 25 years. They are both covered for € 400,000 life cover and € 200,000 serious illness cover. After 15 years Andy suffers from one of the covered serious illnesses. € 200,000 is paid to him. The policy remains in force, and Julie & Andy each remain covered for € 400,000 life cover and Julie remains covered for € 200,000 serious illness cover.
Most of us will be aware of a member of our family, a friend, or business acquaintance who has suffered a major serious illness such as cancer, a heart attack or a stroke. Thankfully, there have been remarkable advances in medicine in recent years. As such, you can now expect to survive and live longer than ever before following a serious illness. However, these medical advances can create serious financial problems – namely, the "cost" of survival.
A 2015 report by Irish Life found the following were the typical average costs faced by people recovering from serious illness.
- € 29,482 cost of a part time carer for 12 months.
- € 47,672 cost of Mater Private Hospital treatment post coronary illness.
- € 65,000 the average cost of renovations to adapt the homes of those recovering from a serious illness