No longer is it safe to rely on the State. Figures show that the likelihood of a long absence from work due to illness is 10 times greater than the chance of dying before retirement. But benefits are harder to obtain because of changes in the way the State supports those unable to work due to long-term illness. Critical illness policies pay a tax-free lump sum on diagnosis of major illness, such as a heart attack, cancer or kidney failure, as well as permanent disability. Many also pay out on a variety of surgical procedures such as bypass surgery and major organ transplants.
Premiums depend largely on age and sex.
As with life assurance, the older you are the greater the risk, so the more expensive the policy. But the premium differences between the sexes evaporate in later life when the man's risk of a heart attack rises. Costs also vary according to occupation. An office worker, for example, pays less than a manual worker. There is an alternative to critical illness insurance - permanent health insurance, sometimes called income replacement insurance.