Financial Services > Protection > Critical Illness


A critical illness policy pays a lump sum upon diagnosis of a dread disease included in a list which is defined in the individual policy.


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There are wide variations in the breadth, depth and scope of these policies and great caution should be exercised before buying this type of insurance.

For example, most critical illness policies include a stroke as one of the listed dread diseases or critical illnesses.  In every case though the insurer will only pay a claim if the stroke has been of a given magnitude and this will also be defined in the policy. This can often to lead to disappointment when a claim is notified.

To illustrate the point, Bodie was the works manager of a foundry and he suffered seven strokes. None of these events were of sufficient magnitude for his critical illness policy to pay out the benefits, but it was no longer safe for Bodie to continue with his work for obvious reasons.

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Thankfully the cover provided by these policies evolves and improves every year and so it makes sense to reconsider any cover that you have every 3 or 4 years. It is not uncommon to find that wider cover can be purchased for the same or even a lower premium and so you can take the opportunity to increase the cover that you have to offset the effects of inflation since the original policy was taken out.

To demonstrate the point about the breadth of cover it is worth noting that the bank used by Bodie insisted upon selling their own critical illness policies to him and his fellow directors when a loan was taken out. The premiums were reasonable if not the most competitive but the scope of cover was entirely unacceptable. It is hard to understand how anyone could sell a critical illness policy to the owners of a foundry that expressly excluded claims for burns, but that is precisely what this bank did. Having read the policy that the bank had foisted upon the business Corrigans were able to replace it with wider, more suitable, cover at a lower price.