How Good Really is Your Critical Illness Cover?
Does it Include:
What Is It?
This is an addition to the plan whereby one or more children are insured against being diagnosed with one of a list of critical conditions. A successful claim does not reduce the life insured's sum insured.
Around 650 children under the age of 19 were diagnosed with cancer during 2014. The International Burn Injury Database confirmed that 41% of all third-degree burns that exceeded 20% of the body surface applied to the under 19s.
Typically, around 4% of all claims relating to children, although AIG advised that in 2015 children represented 13.6% of all claims.
There is no ABI or commonly used wording although typically a plan may have these facets:
Age 30 days to 18 years
Lower of £25,000 or 50% of sum assured - one claim per child
All legally adopted children and step-children from a marriage or civil partnership
14 day survival period
No pre-existing conditions
Unlike the parent life insured there will not be any major life assurance on the child and this makes the survival period of great importance. The major differences are numbers of conditions covered, the wordings, the amount of insurance, the age limits and the number of claims allowed per child or policy.
AIG and HSBC only require a 10 day survival period, whereas most other insurers agree on 14 days with Beagle Street requiring 30 days.
Most insurers agree that a child is aged between 30 days and 18 years although VitalityLife and Zurich will not cover children younger than three months. Legal & General extends cover to age 21 if the child is in full-time education. LV=, Old Mutual Wealth and Scottish Widows PFL plan extend cover from birth to age 21 with AIG, Royal London and Scottish Widows Protect extending this until age 22. Aviva uses age 18 but goes to age 21 if the child is in full-time employment.
Aegon, AIG, Aviva, Canada Life, HSBC, L&G, LV=, VitalityLife, Old Mutual Wealth, both Scottish Widows plans, and Zurich all pay the lower of £25,000 or 50% of the critical illness sum assured. The other insurers pay the lower of £20,000 or 50%. For additional payment conditions, Zurich limits the payment to £15,000 or 20% of the sum assured. Aviva has a children’s only upgrade with a fixed payment of £25,000 or £50,000 on the diagnosis of certain conditions.
AIG, Aviva and LV= include congenital conditions which greatly increases the value of the heart surgery definitions. Additionally, AIG, Aviva, Canada Life and Scottish Widows Protect specifically include cover for Hydrocephalus treated by shunt insertion, Muscular Dystrophy, Cerebral Palsy, Cystic Fibrosis and Spina Bifida. AIG and Aviva go further by also including Muscular Dystrophy, Cerebral Palsy, Cystic Fibrosis, Spina Bifida and Down’s Syndrome with AIG additionally including Type 1 Diabetes, a condition that children are more likely to be diagnosed with than adults.
Legal & General includes a number of additional children’s benefits, firstly, £4,000 if the child dies, which excludes pre-existing conditions and where a child’s claim has already been paid. Secondly, up to £1,000 towards childcare costs if the insured is recovering from a critical illness claim and, thirdly, Up to £100 per night family accommodations benefit for every night the child spends in hospital up to a max of £1,000. Aegon, AIG, Aviva and both Scottish Widows plans pay £5,000 on death of a child whilst Canada Life has extended this to £10,000.