Read Aloud the Text Content

This audio was created by Woord's Text to Speech service by content creators from all around the world.

Text Content or SSML code:

12 Critical illness insurance 12.1 Definition and use to meet customers needs The contract provides a cash sum on the diagnosis of a critical illness, such as heart attacks, strokes or many forms of cancer, which could be used for nursing and other care. It therefore meets an important need for financial security in the event of contracting such illnesses. Normally the specific critical illnesses covered will be explicitly listed in the policy documentation. The policy wording is critical pun intended in defining precisely which diseases are covered, which could potentially have a huge effect on the claim experience. In some jurisdictions the definition of illnesses may be standardised across all contracts of that type. Policies are normally withoutprofit or unitlinked. The benefit may be offered in ‘standalone form, where the contract covers only critical illness. In the standalone contract, no benefit is paid on death. Alternatively, the benefit may be offered as a rider ie additional benefit on another contract. Such a rider benefit may operate in one of the following two ways One Where the benefit is attached to another contract, typically an endowment, whole life or term assurance, it usually constitutes an acceleration of the death benefit. This means that the contract will pay out on the first to occur out of death or diagnosis of a critical illness. One appeal of the acceleration contract is that it allows the holder of, say, a whole life assurance to enjoy the benefit under certain unenjoyable circumstances. Two The rider benefit may act as an additional benefit. Under this second version there is the potential for two separate sums assured to be paid out once on critical illness and again on death within the policy term. The maximum possible payment under this version would be the total of the two sums assured. 12.2 Existence of a group version A group version of the standalone contract could be used by an employer to provide financial security for employees in the event of contracting a critical illness.