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Critical Illness Claims and COVID-19

It’s not surprising how quickly the coronavirus pandemic has influenced the wealth protection market. While the focus has mainly been on life insurance and income protection, experts expect critical illness claims will also rise.


This does not constitute advice and advice should be sought in all instances before acting on it.


We’ve covered why doctors are making protection a priority and how the options for life cover are running out, plus we’ve highlighted the changes some insurers are already making.


Here’s an update on Critical Illness cover (CIC) and how your cover might support you during the COVID-19 pandemic.


Critical Illness cover refresher

Critical Illness is similar to Income Protection (IP) policies in that the money received can be used to pay your mortgage/rent, bills or even groceries. The pay out is in the form of a lump-sum and only one claim is allowed during your policy term. However, the illnesses covered are often more selective than IP.


The importance of the survival period

The survival period, a staple of most critical illness policies, is the period of time the insurers stipulate that the person must survive after being diagnosed with a condition before the claim is paid out.

This is relevant to the COVID-19 outbreak because those who are gravely affected might possibly develop a condition that could be covered by a critical illness policy. Unfortunately, once a patient reaches this stage, chances of survival aren’t high.

Sometimes a CI policy is tied into life cover so the survival period becomes irrelevant in the case of death – the policy will pay out regardless. But if you only have a critical illness policy without life cover, your family might struggle to make a claim if you die before the end of the survival period.


Why hospitalisation is key

One of the crucial differences that sets CI cover apart from income protection is the limited number of conditions covered.

Conditions triggered by the coronavirus are unlikely to meet pay out criteria but those related to hospitalisation, especially if the policyholder ends up in intensive care, are more likely to be covered and eligible for a pay out. More specifically, if you require round the clock mechanical ventilation for 7-10 consecutive days, which impacts approximately 5% of COVID-19 patients. Once admitted to hospital, ventilation can happen within 24 hours to over 60% of those admitted.

Unfortunately, we’re still in the early days of the pandemic so data is still relatively new and constantly changing, so it’s hard to say exactly how many patients will require more serious interventions that would be covered under a critical illness claim.


If you’re looking for Critical Illness cover

While we’re all doing our part to prevent the spread of the coronavirus and staying home whenever possible, the damage to the protection market has already been done.

While IP policies are disproportionately affected, claims for Income Protection and Critical Illness cover will continue to rise. Certainly, people with the most serious cases, needing hospitalisation and critical care, will take advantage of their CI policies in increasing numbers. And regrettably, as the number of deaths from the virus appear continue to rise, claims against life cover policies will also continue to increase.



Have questions? We’re here to help

It’s a difficult time for us all. And with insurance providers buckling down on coverage, it might be confusing figuring out what your policy covers and tough to upgrade in the middle of the pandemic. But we’re here to help you so you can focus on what’s important. If you have any questions, don’t hesitate to reach out today.


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