Critical Illness cover is a long-term insurance policy to cover specific and specified serious illnesses listed within a policy. Under such circumstances the policy pays out a tax-free lump sum payment, to help pay for your mortgage and or debts. It can also be designed to pay for alterations to your home such as wheelchair access should you need it. Ultimately however it is your choice how you spend the money.
Critical Illness cover will pay out if you get one of the specific medical conditions or injuries listed in the policy. But be aware that not all conditions are covered and policy will also state how serious the condition must be.
Did you know that every year 1m workers in the UK unexpectedly find themselves unable to work because of injury or illness, according to the Association of British Insurers (ABI).
Some EXAMPLES of Critical Illnesses that might be covered include:
- Heart attack
- Certain types and stages of cancer
- Conditions such as multiple sclerosis
Most policies will also consider permanent disabilities as a result of injury or illness. It only pays out once and then the policy ends. Some policies will make a smaller payment for less severe conditions, or if one of your children has one of the specified conditions.
What is not covered?
Some serious illnesses might not be covered, for example, some cancers and conditions not listed in the policy.
Pre-existing conditions may not be covered for health problems that you knew about before you took out the insurance and this type of insurance does not pay out if you die. That said you can normally add life cover to these type of policies.
What is covered and what is not, will be set out in the policy details so make sure you’re fully aware of them and that they cover your needs. When comparing the cost of two different Critical illness policies the lower costing policy may not be as comprehensive in the conditions of cover and as such cost alone is not normally the only comparison that should be done. We can help you choose the right policy.
Do you need it?
State benefits might not be enough to replace your income if something goes wrong. If you’re eligible, welfare benefits range from around £70 a week to just over £100 a week, depending on your circumstances (i.e. whether or not you have children, a certain level of savings, or if your partner works).
Critical illness cover could be considered if:
- You don’t have savings to tide you over if become seriously ill or disabled
- You don’t have an employee benefits package to cover a longer time off work due to sickness
- You would like your mortgage repaid if you were diagnosed with a Critical Illness
How much does it cost?
Your monthly payments will depend on a number of factors, including:
- Whether you smoke or have previously smoked
- Health (your current health, your weight, your family medical history)
- Job (some occupations carry a higher risk than others and may mean you have to pay more each month)
- The amount of cover you take out
- A fixed amount of cover or decreasing cover
When applying for any type of insurance, including personal protection, it is very important to disclose any requested or relevant information as failure to do so may adversely affect any future claim.
Why not talk to the professionals about properly managing your finances
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