It is imperative that you get the key documents once you have signed up for a critical illness plan. That may seem an obvious thing to say but here follows a cautionary tale.

A woman, on becoming self-employed, in order to meet the requirements of her bank with whom she had her mortgage, was advised to take out a critical illness plan. She duly met with the advisor who spent an hour with her talking about the benefits and assessing how much she would need to pay to cover the cost of her mortgage payments at least if she were unable to work due to critical illness. Medical questions about family history regarding, kidney disease, cancer, heart disease and suchlike were discussed. Having given pertinent information on whether she smoked, her age, general health etc she left with a pack of papers that outlined her financial commitment to the policy and the information she had given the advisor. She was not given the key documents plan but only discovered she was not in possession of this vital document when she made a claim a year later.

The woman had unfortunately developed a brain tumor, a meningioma that had to be excised by opening up her skull and removing the offending tumor. There was no alternative to an operation, as the tumor would continue to grow and be ultimately fatal if not removed. She was delighted that it was diagnosed as benign and there were no secondary growths and relieved the only negative results were a large horseshoe scar on her skull and some compromised mobility function in her left leg – a small price to pay. Having paid out for critical illness and survived the 28 days subsequent to surgery the policy had outlined, she rang to make a claim. They asked her for her key documents policy number. She couldn’t find a number on the paperwork given to her by the bank advisor. The company said they would send out the relevant document. On receipt of the document she put things into play and her doctor was contacted to verify the details. No payout! The tumor wasn’t ‘cancerous, secondary and invasive’. That was a bit of a blow. Somewhat aggrieved she read through the key document. Kidney disease was only due for payout if it was secondary [by that time it is usually fatal!] and heart disease claims only paid out if open-heart surgery was done by a consultant – hard luck if you had a key-hole operation. Had she been in possession of the key document, and as her doctor commented also, there was no good reason for taking out this insurance as its terms were so restrictive…and only paid out if you survived – it was not life cover.

Author : Steven Mcdouglass is an employee of Which Network – A Mortgage Network consultancy company.

Income protection is not life cover – there are no payments on your death so it is probably most suitable for individuals without dependents or a partner who would be left behind if you died having to face the costs of living without your income contributing to the household. When you take out a policy for income protection it will be determined upon the amount of salary you wish to cover, most provide 75% of your salary in the event of you becoming ill or injured and being unable to work as a result of the circumstance. Premiums generally, though not exclusively, take into consideration your age. This is not being age-ist. There are several medical conditions that can affect people because age is one of the contributory factors to the condition. For example, bowel cancer, prostate cancer and diabetes are more likely as you get older as is coronary disease too. Gender is another consideration as despite equality of opportunity there are significant differences, medically, between men and women. Pre-existing conditions and your general health are factors that will be considered and whether you are a smoker or not – smoking is a contributory factor to many conditions that turn into diseases of organs. The type of occupation you hold will be a consideration, whether you do manual work or office work and the risks involved in the type of work you undertake. It is generally accepted that income protection cover will cost approximately the equivalent one week’s salary per year for most policy holders, so having an annual salary of say, £24k would reasonably result in payment of £500 for an income protection policy, which equates to £9.61 per week for peace of mind.

Author: Steven Mcdouglass is an employee of Which Network – A Mortgage Network consultancy company.