Critical Illness Cover

If you have people who depend on you, having life insurance is very critical for you. None of us is comfortable at the thought of our own death, but it is something that you have to plan for if you have loved ones depending on you. If you were to die, you need to be certain that your family’s financial security is preserved. Think whether or not your children will be able to go to college or your spouse will be able to retire in comfort. Taking a life insurance policy will help you answer these questions with confidence. Have a look at the 3 factors that influence the rates of your life insurance policy.

1. Your income: The first thing that is checked by the insurance company is your monthly income. You should be earning a sufficient amount every month to get low insurance rates. If you do not earn the required amount of money every month, then the insurance company may be skeptical whether or not you will be able to pay your premiums every month after meeting your monthly obligations. Thus try to increase your monthly income to qualify for lower life insurance rates.

2. Your age: Your age is another factor that is taken into consideration by the insurance company before deciding on the premium rates. The older you are, the more likely you are to die. Hence you will be charged high premium rates. Start getting a life insurance when you are young and less prone to death to save those extra dollars on premiums.

3. Any pre-existing health conditions: If you have any pre-existing health conditions, then your offer to insure your life may be turned down. Diseases like asthma, lung problem, cancer can prevent you from getting a life insurance policy. But you need not worry because most states have high risk pools that offer life insurance policies to people even with pre-existing conditions.

4. Your occupation: If you are engaged in a high risk occupation, then that will put you into a higher bracket when it comes to getting life insurance rates. You will have to shop around to compare insurance rates from different companies, if you are in this category.

Take a different approach to life with a life insurance policy. If you are keen on saving money on your life insurance policy, then consider the factors that determine you r life insurance rates.

Once the proposal form is filled in, the proposer has to wait until the company has assessed it, obtained (in some cases) a medical report from the proposer’s doctor, and decided whether or not to accept the risk. If it does, it will generally send a letter saying so and asking for the first premium; it is only after this first premium has been paid, or more exactly after it has been received by the company or its agent, that the cover commences. (A few offices now allow the first premium to accompany the proposal form on simple types of critical illness insurance policies, in which case cover commences as soon as the company accepts the proposal.)

Only after it has received the first premium does the company prepare and send out the policy document, setting out the terms of the contract. The policy document should be kept with care as it will be required (a) for a claim and/or (b) if the policyholder wants to borrow against the policy. If it is lost, the company may for a fee issue a duplicate, but before doing so will require the policyholder to sign a form of indemnity. In the large majority of cases where people think they have lost their policy document, a thorough search will normally uncover it, perhaps in the hands of a bank manager, solicitor or accountant.

The policyholder can often choose whether to pay premiums annually, or at six-monthly, quarterly or monthly intervals. Premiums are normally calculated on the basis that they are paid annually in advance, so that the payment at shorter intervals means the company receives less interest and incurs more expenses than on the annual basis. Monthly premiums therefore carry a loading of 2-5% over annual premiums.

Monthly premiums may be on a “true” or an “installment” basis. In the latter case, if the assured claims between two policy anniversaries the balance of a year’s premiums will be deducted from the policy proceeds. No such deduction is made if the policy is subject to “true” monthly premiums.

One important point to note is that by its nature property is a relatively illiquid investment. It is not easy to turn bricks and mortar into cash because the sale of a property is a protracted business in terms both of getting a buyer and of completing the legal transaction. For this reason, most property funds contain a clause whereby they may delay the cashing-in of units by investors for up to six months if necessary. To avoid the necessity of invoking this clause, most also have “stand-by” credit facilities with their parent company or a bank whereby the latter guarantees to provide specified sums of cash if this is necessary. Such guarantees are, of course, only as good as the companies offering them and those offered by smaller companies and funds may be deficient in this respect.

Property funds are normally valued at monthly intervals. Such valuations are to some extent arbitrary, because the only real test of a property’s value is the price that someone actually pays for it. Hypothetical valuations based on the return that institutional investors are currently seeking on new property investments are no more than estimates and cannot provide anything like the same degree of certainty about value as a Stock Exchange price quotation does. Valuers do, of course, do their best to make as accurate judgements as they can, but movements in valuations over any short period should not be taken too seriously.

Equity funds are very similar to unit trusts, restricting themselves to investment in shares. Fixed-interest funds invest in a wide range of fixed-interest securities from local authority to commercial loan and gilt-edged stocks. The gilt-edged critical illness insurance fund restricts itself to the latter category. The cash or money fund invests only in short-term deposits with banks and local authorities, and can obtain far better interest rates on the money in large sums than the individual can hope to get on his small deposits. The managed fund normally places its investments between all these types of investment, holding units in all these other funds.

If the parents do have capital (or the grandparents are providing it) a trust may be set up into which money is paid. This educational trust then purchases a series of deferred annuities payable not to the parents or the child but to a school (which does not have to be named until shortly before schooling begins). This method may especially be suitable for those paying high rates of income tax, for which the net returns can be of very important value.

These trusts are quite different from the trusts con­stituted under the Married Women’s Property Act (MWPA) which are normally used to ensure that the proceeds of a critical illness insurance policy designed to benefit children actually reach them free of tax. In this case the policy is written under trust and the contract contains the stipulation that the critical illness insurance policy proceeds are to be payable to either the wife alone, to the wife and children, to the children alone, or to an individually named child or children.

Normally the husband and wife are named as the trustees, thus maintaining some control over the disposition of the proceeds. However, once the trust has been constituted, it may not be altered without the consent of those named as beneficiaries, and a child may not give its consent until reaching the age of majority (18). Thus, the use of the MWPA provisions for educational plans does mean an irrevocable commitment of the proceeds to the child(ren) and this may not be desired by some parents. The main advantage of the procedure is that, if the policyholder (usually the father) dies, the proceeds of the policy will be immediately avail­able to the wife and children and no cash will be payable.

The MWP is a type of policy which is also useful for providing a sum for a child, say, at the age of majority or on marriage. Provided the wording of the trust allows this, the trustees can have the power to make the policy pay benefits.

Critical illness insurance has helped many to get out of severe illness stages and financial imbalance crisis to normal and decent life living human beings. If asked, many will tell you that the support offered by critical illness insurance is priceless. Some can even tell you that what you get from critical illness insurance is worthier the money that you have paid as premiums. Therefore, you need to test critical illness insurance to know what it is all about. Once you start to contribute premiums, you could be sure that by one way or the other you’ll receive benefits which will help to provide financial security. When it comes to critical illness insurance, you get many options.

The return of premium rider is an exquisite advantage that can be obtained from critical illness insurance. This option gives a return of all premiums to the inheritor in case the policyholder passes away. In most of the cases, insurance companies do not apply extra charges for this rider but may sometimes ask for additional premiums to be paid. Moreover, you can come across the pay back of premium rider. This option will return all of your premiums if at the end of your policy you have made no claims at all. However, insurers may require that you pay an additional amount of premium to benefit from this rider. The inclusion of this rider to your critical illness insurance policy can be done at the time you buy your policy. Sometimes you will get interest on your premiums.

Besides, there is the children rider. Many insurers automatically provide insurance for children aged 2 to 17. On the other hand, some insurers might even offer protection for future children. In other words, critical illness insurance for the child or children will become active as soon as the child takes birth. The children rider comes into play when a child suffers from a severe illness. It pays a tax free lump sum to the concerned parent who then uses the money to get his offspring cured.

In case your claim had been for another disease other than heart attack, you may invoke the buyback benefit after 1 year of acceptance of your claim. Depending on your critical illness insurance policy, you have the ability to take the buyback benefit inside 2 years after your claim had been accepted. Most of the times, the buyback option will help to cover heart attack, cancer and stroke. However, the definitions of these diseases may not change. In other words, they will have the same definitions as when you had initially bought your critical illness insurance plan.

Normally, the survival period that applies to these conditions is around 14 days. In case your original critical illness insurance scheme included death benefit, this as well will be added to the buyback benefit. Any exclusion found under your initial critical illness insurance plan may, in addition to, apply to the buyback benefit. The buyback benefit will provide you with a tax free lump sum which can reach around half of your original cover amount. Nonetheless, the maximum benefit you can obtain may not surpass GBP 100,000. Once you obtain this cash lump sum with critical illness insurance, you will no longer be eligible for further claims.

You can also add other additional benefits onto your critical illness plans such as waiver of premium or indexation option, these addtional benefits  will be at an extra cost to your plan however they can provide extra peace of mind.

With the advent of the internet critical illness insurance is now much more widely available. Previously you had to either go visit your financial advisor or have them come to your house after work. They often were tied to one particular provider and how were you to know if this was the best value for money or the best contract to suit your needs ? There are huge differences between the policies some may only cover you for 29 critical illnesses and others up to 40.

If your advisor could offer a policy with 29 then you were potentially getting a poorer deal. But the internet has brought us online quote engines, these are marvelous, they give you accessibility to all the contracts in the market so you can chose the correct policy that will suit your needs. In addition to this with there being a number of critical illness brokers all together on the internet this will drive the price down for you. This once again is fantastic news the internet has brought you the best polices at the best prices.

Within the protection industry there are many leading insurers who provide critical illness cover.

Critical Illness providers will cover a range of conditions. The following is a general guide of the conditions covered: Alzheimers’s Disease, Aplastic Anaemia, Bacterial Meningitis, Benign Brain Tumour, Blindness, Cancer, Cardiomyopathy, Coma, Deafness, Heart Attack, Heart Valve Replacement or Repair, HIV infection, Kidney Failure, Liver Failure, Loss of Independent Existence, Loss of Hands or Feet, Loss of Speech, Major Organ Transplant, Motor Neurone Disease, Multiple Sclerosis, Parkinson’s Disease, Pre-Senile Dementia, Rheumatoid Arthritis, Severe Lung Disease, Stroke, Third Degree Burns.

Many insurers adopt the definitions as set out by The Association of British Insurers (ABI), as they represent the shared interests throughout the UK protection industry.

For each individual policy the premiums calculated are dependent on the circumstances of the applicant. For example, an applicant’s age and gender will influence the premium together with whether the applicants smoker status, their occupation, their current state of health and their medical history and also their family history.