Learning that you have  cancer is shattering news. At some time duringour lives, one in 4 of the population will get the disease. It is not surprising that PPP observed that of all illnesses, cancer causes Britons intense apprehension.

At this arduous time you would be expecting an immediate settlement by your health insurance company, allowing you to focus on getting better. Sadly you could get a big shock. Many cancer sufferers make a complete recovery with thanks to progression in medical science. Currently some cases are not even looked upon  as severe, so it is frightening to find out that lots of medical and life insurance policies only pay up when your condition is life threatening or terminal. It’s the same for mortgage insurance.

An independent financial adviser, warns that people must not suppose that they will get a pay out just because they have been diagnosed with a severe condition. He warns people not to concentrate on the cost alone when taking out an insurance plan, but to read the Ts and Cs in a private medical or critical illness policy to ensure that the insurers will pay you when you really need it.

On the diagnosis of a specific condition, critical illness cover will pay out a lump sum. Whereas, you will get better quality and swiftness of treatment with private health/medical insurance. Such as, appropriate licensed treatments could be offered, which are not dispensed on the NHS. A spokesperson of independent advice firm LifeSearch says about 16 per cent of claims do not succeed on protection policies and at pay out for severe illnesses and diseases. On the other hand some cancers sound much worse than they are and in these cases you more than likely won’t get any money from traditional plans.

In the past life assurance companies had an all or nothing attitude, but they are now starting to offer plans with a partial or full payout. An illustration of this is Pru Protect, an alternative critical illness policy from the Prudential, which links the size of the settlement to the severity of the illness and how much anguish it will cause. This policy does not become invalid once a demand is made but subsequent pay outs may be reduced drastically. This feature is specifically important when the patient is diagnosed with a stage-one or stage-two cancer, which may become even more serious.

Recently the insurance industry addressed the vexed issue of customer non-disclosure. The Association of British Insurers has brokered a new agreement, which will allow claims effected by non-disclosure to receive a full or partial pay out, which has not been the case in the past.

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Not Many expert financial advisers would’nt disagree that protection insurance should be the basis of most peoples financial planning whether it be guarding against the consequences of early death, long term illness, accident or (particularly now with the arrival of the credit crunch) cover for unemployment.

The best life insurance is rightly the basis of financial planning whether it be used to protect your home owner loan or supply a tax free lump sum for your loved ones in the event of your demise. Unhappily, some other kinds of protection cover have a less enviable reputation. Payment Protection insurance has a reputation for being miss-sold and critical illness cover has in the past suffered from widespread policy exclusions which permitted the insurers to decline a high number of claims, even if they seem valid.

But last month a flicker of light materialised when Scottish Equitable made known its first 1/2 figures on the outcome of claims on its critical illness insurance policies. These figures seem to signify that at last the problem of unintentional disclosure of medical particulars when the policy application is concluded, is being resolved.

Only a few years ago critical illness cover claims were being repeatedly refused on the merest suggestion that the client had left out any minor medical condition – even a foot infection or a sore throat! According to the figures reported by Legal and General, their claim rejections have reduced sharply from 6.5 per cent last year to 1.3% in the last six months.

Why has this happened? Axa, Scottish Provident, Friend Provident, Norwich Union, LV and Scottish Equitable  have put forward a variety of amendments calculated to reduce their refusal rates. They start with an absolutely obvious explanation of the significance of complete medical revelation right down to when they last saw their Doctor no matter how slight the cause. And some companies such as Friends Provident get a medically trained person to phone each applicant to go through their medical history in more detail. Then when the life insurance cover goes on risk, some insurance companies are telling again the insurance holders of the importance of full health disclosure and giving them the opportunity of correcting or adding the information on their application.

If the latest details are assessed as increasing the insurer’s risk, then the insurance company will inevitably increase the monthly premium – but that is definitely far better than paying the original premium for years and years and then getting a claim rejected.

The insurers should have taken route years ago as their slow-coach style has spoilt the public’s perception of protection insurance. Nevertheless there is an absoluteneed for protection insurance so let us wish that it reaches the recognition its so richly warrants.

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Life insurance helps your dependants to be financially secure when you die. When you buy stipulate the cash value you want the plan to pay out when you die – this money is called ”the assured sum”. The amount you pay each month is based on this insured sum, and on your age and gender.

Your payments will also be based on the type of insurance policy you need. There are two fundamental types of life insurance: level term insurance and decreasing term assurance plus many variations within these categories.

Term assurance is often purchased at the same time as a mortgage and should cover the same period of time as the mortage. If you haven’t died at the end of the insured period, you don’t get anything back. It’s a simple insurance with no aspect of investment. It can protect your family by paying out a cash sum should you die within the period of time covered by your insurance.

There are two basic types of term cover. Level term gives the same payout during the entire life of the policy which means that you beneficiaries would receive the same amount whether you died on the first or last day of the policy. Level Term cover is usually sold with an interest-only mortgage, where the entire amount borrowed has to be repaid in full on the final day of the mortgage’s term.

Decreasing term policies are where the payout reduces by a known sum each year, finishing at nothing at the end of the term. Since the amount of insurance cover falls during the term, premiums on decreasing insurance are cheaper than on level term policies. This cover is usually only taken out with repayment mortgages, where the outstanding quotes for mortgage cover reduces during the term of the mortage.

There is also a type known as increasing term insurance. Sometimes it is known as index linked insurance. This means that the potential payout increases by just a small sum annually in line with inflation. It is a good way of protecting the buying power of the sum you have insured for.
With convertible term insurance, the policyholder has the option of moving to another type of life assurance – for instance a “whole of life“. If a person does take up this option, they do not have to have any extra medical investigations.

If you want your family to receive a monthly tax free income in the event of your death, you need a type of insurance called family income benefit. This gives the policyholder’s dependents monthly payments from the date the policyholder passed away to the end of the policy’s term.
Life assurance can be bought on the internet or from the high street through  banks, insurance companies, friendly societies and brokers. Many sell directly to the public. Other outlets selling insurance include websites and mortgage brokers.

Factors affecting monthly premiums include the sex, age, sum assured and whether or not you are a smoker. Some insurance companies insist on a medical before offering cover, but this is not as common as in time gone by.

Prices for life insurance change over time and if you do have a plan it can be well worth shopping around to find out if you can get a much cheaper deal. You can usually cancel your existing plan without penalty – but always make sure you have another set of cover in place before you  cancel your existing policy.

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Not many of us are covered against severe illnesses even though it may be fall us unexpectedly. Standard Life, the income protection provider, has carried out  that say that only 5 per cent of the Britons work force possess critical illness insurance, even though they will get a large sum if they have  a heart attack, stroke or suffer from cancer.

17 per cent of people consider the insurance to be too dear, the survey reveals, which give reasons for the low take up.

Would-be customers are also confused by the wording of policies and the difference between constant health insurance and critical illness insurance.

An operational party put together by the AIB, is at this time re-examining the phraseology of policies. The situation might become much more baffling if the working party choose to lessen the number of diseases defined as a critical illness.

UnNum Provident have launched a new plan called Elixia 123, which it claims cuts the price of critical illness insurance by around 30 per cent and sometimes by as much as 49 per cent.

This will be attained by allowing clients to choose the illnesses for which they require cover. There are three groups of risk. Group 1. Invasive cancer, strokes and heart attacks. The policy will only pay out if the condition leads to major life style changes or is life threatening.

Category 2. Conditions that do not have so much impact on life expectancy but do dramatically affect life style. Alzheimer’s, blindness and Motor neurone disease  are incorporated in this group.

Group three. Illnesses that are traumatic but have slight effect on life anticipation. Life style adjustments may perhaps be involved. This category protects strokes and minor heart attacks, open heart surgery and less serious types of cancer.

You choose a mix of categories and your premium is calculated accordingly. If you can not afford all of the categories you could only choose group 1  to cover you for life threatening events. You would then ge a 100 per cent  settlement if you are diagnosed with a category 1 event and nothing under categories 2 and 3.

Possibly you are more concerned about prolongeddisability, in which case you might choose a full settlement under category two and a lower percentage for one and three. Clients Consumers who desire comprehensive cover can pick the full 100 per cent benefit no matter which category their condition appears.

Most people may not know

Critical illness insurance is not that costly so it is prudent to go for a comprehensive policy, which will give you peace of mind.

Jennifer Green, the distribution development manager at PruHealth, is worried about how the jargon is explained. She emphasises that consumers must comprehend precisely what they are buying. For example, when is a condition defined as major? The first and the third categories need clarification before taking insurance as there is not much difference between them in her view. Difficulties can happen later if the client has not fully appreciated the terms of the insurance policy when they sign.

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