Serious illness cover

Thumpette

Hi all,

My Dad has recently been diagnosed with Cancer, and based on my own recent mortgage application experience I reckoned he'd probably have serious illness cover.

He does, so we've begun the process of claiming. Now my understanding from speaking to my broker at the time is that serious illness cover pays out independently and still leaves life assurance intact. I then read something (and confirmed with boi) that being paid on the serious illness may nullify the life cover for (hopefully the distant) future.

I'm worried now that I might have advised him wrong to go for it, believing that it was just something extra he's entitled to and could end up causing my mum more difficulty in the future. Also as they have a joint policy if they do void it will that mean that neither of them get paid out for their life assurance?

Sorry probably sounds a bit morbid, just really worried I've steered them wrong here?

coylemj

Thumpette wrote: »

Hi all,

My Dad has recently been diagnosed with Cancer, and based on my own recent mortgage application experience I reckoned he'd probably have serious illness cover.

He does, so we've begun the process of claiming. Now my understanding from speaking to my broker at the time is that serious illness cover pays out independently and still leaves life assurance intact. I then read something (and confirmed with boi) that being paid on the serious illness may nullify the life cover for (hopefully the distant) future.

That's highly unlikely, life cover and serious illness cover are completely separate products. Can you quote what the BOI said to you - did you get a response in an e-mail or via a letter? If it was a call centre jockey then I'd disregard it.

Is the life cover a term policy (similar to mortgage protection) or a 'whole of life' policy?

phormium

I am no longer in the industry but when I was 4/5 yrs ago there were policies that when you claimed under the serious illness part it was like an advance on the life cover and there was not a second payout on death. So while they may be separate policies there are also combined ones out there, best to check the actual policy itself.

Thumpette

Hiya,

Thanks for the reply. They told me (call centre) that there were 3 scenarios.

1- claiming in serious illness nullified the life assurance and no further payment made on death

2- claiming on serious illness (if the payout was less than life cover) would mean that payment on death would be initial cover minus serious illness payout

3- no correlation, completely independent.

I didn't give them the policy number to check which one it was, will do that tomorrow and check.

I'm not sure of their policy, I know their mortgage is all paid off but they have kept the life cover on.

Even if it is option one or two it's probably still better to go ahead and claim to have the money now for peace of mind for medication etc during the illness, so long as it doesn't also effect my mum's policy. I just feel bad if I've given them wrong info.

I will call tomorrow and see if I can get more specific info.

Thanks for the reply though

Pablo Sanchez

Thumpette wrote: »

Hiya,

Thanks for the reply. They told me (call centre) that there were 3 scenarios.

1- claiming in serious illness nullified the life assurance and no further payment made on death

2- claiming on serious illness (if the payout was less than life cover) would mean that payment on death would be initial cover minus serious illness payout

3- no correlation, completely independent.

You were advised correctly, it could be any of these three options depending on his exact policy and options he chose.

1 & 2- This would mean he has 'accelerated' serious illness cover, ie it would pay out in the event of death or/and serious illness. If the level of cover chosen was the same for the life and serious illness cover then the policy will simply pay out and the cover ceases.

If say he has 100k life cover and 50k accelerated serious illness, then the 50k will be paid and that leaves a further 50k to be paid on death.

3- This could be true as well if he has a policy with 'double cover' ie 100k life and 100k serious illness as a separate benefit. This means 100k would be paid due to his cancer, but the 100k life cover would not be affected and will still be available to claim, god forbid, on death.

MikeinLucan

Hi Thumpette,

I'm involved in the industry at the moment, the key words you need to clarify your query are 'Accelerated Serious Illness' or 'Standalone Serious Illness'.

The former will pay the benefit on the event that happens first, either death or diagnosis of illness, leaving any excess life cover payable on death. For example, life cover of €200k, and illness cover of €50k on an accelerated basis would be after claiming the illness benefit of €50k, this would leave the remaining €150k payable on death.

The latter would mean that both benefits are independent of each other.

You mentioned that it is a joint policy - claiming the illness benefit will mean that the policy will cease for both your parents (unless the life cover benefit is higher than the illness benefit like the example I gave above), and secondly, your mother will have no illness cover.

Judging from your comments, my best guess is that the policy is accelerated as it uncommon for joint plans sold through banks to have independent life cover and illness benefits.

Hope this helps,

Mike