Serious illness (sometimes also called specified illness) is a type of cover that pays out in the event of the life assured experiencing serious ill health. Life assurance policies may offer serious illness cover with life cover or on a stand alone basis separate from the life policy.
Serious Illness cover is also know as Specified Serious Illness, Critical Illness, Living Insurance, Dread Disease Cover. Serious Illness cover provides a tax free capital sum in the event of the insured being diagnosed as suffering from or contracting any of the serious illnesses specified by the particular policy.
The life assured must satisfy the life company that he or she has been medically diagnosed as suffering from or have contracted an illness covered by the policy, before the life company will pay out. Therefore, medical proof must be provided that such an event has happened. Typically you must also survive 14 days from the event occurring.
The serious illnesses specified by the policy will vary from life company to life company and some illnesses may be subject to “specific exclusions”. Serious illness is usually available in one or two formats, as an acceleration or advance payment of part or all of the life policy, or on a stand alone basis with no attaching life cover or with a reduced benefit payable on death.