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Dispelling misconceptions about critical illness cover

28 September 2017

The fact that relatively few employers offer critical illness cover as an employee benefit is in our view more the result of widespread misunderstanding than any reflection on the value that the product has to offer.

One common misconception that has prevented employees from banging their employer’s door down to get them to offer this cover is undoubtedly the idea that dread diseases somehow “only ever happen to other people”. But an abundance of statistics suggest that these other people are rather too numerous for comfort! 

Take, for example, the case of cancer – which accounts for over half of all critical illness pay-outs industrywide. According to Cancer Research UK, as many as one in two people in the UK born after 1960 will be diagnosed with some form of the disease during their lifetime.

But, perhaps just as important, is a widespread failure to appreciate the very high chances of surviving many conditions that used to be perceived as death sentences. According to Cancer Research UK, 50% now survive cancer for 10 years or more, and a range of studies show that the average multiple sclerosis patient currently has a life expectancy that is only six or seven years shorter than that of the general public.

Unlike death in service benefit, critical illness is very much a cover that pays out to the living, and when survivors return to work they are more than likely to be highly grateful to employers who have ensured their financial security during their time of need.

The cover pays out a lump sum when employees are diagnosed with cancer, a heart attack or stroke, multiple sclerosis, kidney failure and a whole range of other specifically listed serious conditions. The proceeds can be used for medical treatment, making adaptations to the home, having a holiday for recuperation purposes, bolstering savings or, indeed, for any other use the employee chooses.

It should not be confused with the ‘terminal illness benefit’ commonly available on individual life policies – which simply allows policyholders diagnosed with only months to live to take their life cover pay-out in advance of death.

Nor should it be confused with income protection, which pays out a regular income to those with long-term health problems. Unlike critical illness cover, which covers specific conditions regardless of whether employees are off work, income protection offers a more blanket-type cover based on a sustained inability to work.  

Income protection and critical illness cover can in fact complement each other well, and there is a lot to be said for offering both. Although they overlap to an extent, neither cover is totally comprehensive.

For example, someone off work for just a few days to undergo an operation for testicular cancer could claim under critical illness cover but not under income protection, whilst someone off work long-term due to stress or back problems could claim on income protection but not on critical illness cover – unless they were actually totally and permanently disabled.

Another popular misconception is that critical illness cover is prohibitively expensive because it is based on multiples of salary – like death in service benefit. It is actually possible to offer small fixed amounts of critical illness cover that bear no relation to salary.

Taking advice from a specialist intermediary like Chase de Vere can ensure that you offer a level of cover best suited to your requirements and budget together with a scheme from the most appropriate provider. In particular, we will make sure that we select a provider with a decent claims paying record, as capabilities in this respect can vary widely. 

We can also help to ensure that the intricacies of the scheme are effectively communicated to the workforce. For example, critical illness cover does not pay out for the mildest forms of breast cancer and prostate cancer, and if employees are not made aware of restrictions like this at outset it can lead to huge disappointment at the point of claim.

If you would like to find out more about how we can help you to choose an appropriate critical illness scheme and to communicate its benefits and limitations then please do not hesitate to contact Chase de Vere on 0345 300 6256 or complete this simple form and we’ll call you.