Broader cover for critical illness

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CRITICAL illness insurance is very expensive, but the latest offering at least covers every illness and disability that other insurers have included in their policies.

Allied Dunbar's LifeStyle Plus charges monthly premiums for a 30-year-old, non-smoking man of pounds 27.08 for cover that reduces after 20 years, or pounds 63.18 for continuing full cover. A woman of the same age will pay pounds 21.58 or pounds 51.88 each month. Premiums for 40-year olds are about twice as expensive.

Rates are set by reference to sex, age, extent of cover and whether or not the person covered is a smoker.

Allied Dunbar says that consumers have been confused by the development of the critical illness market, in which new entrants have concentrated on covering more and more different types of illness. Its new plan provides cover against all the illnesses or disabilities specified in each of the 60 or so rival products.

Allied Dunbar says that 90 per cent of the claims it has paid to date have related to three illnesses or disabilities - heart attack, stroke and cancer.

It has tried to be as explicit as possible over what is and what is not covered. For instance, strokes where there is permanent damage to the nervous system would result in a payout. But minor strokes that leave no lasting effects would not lead to a claim.

Statistics released by Abbey Life last week reveal a similar pattern: 80 per cent of its claims relate to heart attacks and cancer.

The quality of critical illness policies often lies in the fine print. Abbey Life, for instance, defines 'permanent disability' as preventing the policyholder from taking up any gainful occupation. Allied Dunbar will pay out if policyholders cannot work at their own occupation, except if the cause is Aids or HIV.