Critical Illness Cover - When Do You Need It?
Scenario's in which critical illness cover may apply to your circumstances:
Your Current Benefits
Your employer doesn't offer a benefits package to cover a period of long-term illness
Family Cover
You have a family, and you want to ensure they are provided for should you become sick
Mortgage Payments
Ensure your mortgage is paid should you become ill and don't cause any defaults
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In case you don’t have the savings to cover your outgoings, you will need critical illness to cover you and your family if anything unexpected happens.
Critical illness cover, also known as critical illness insurance, can cover you and your family’s needs in a time of serious illness. It is a long-term insurance policy that can pay out tax-free one-off payments.
Critical Illness Insurance FAQ’s
You can choose the policy length, often matching significant life events like children growing up or a mortgage end date. After the policy term ends, protection stops, unless combined with term life insurance.
The amount depends on your financial commitments, such as living costs and outstanding debts. Consider how much money you’d need if unable to work. A life insurance calculator can help determine the necessary coverage.
Commonly covered illnesses include cancer, heart attacks, organ transplants, and strokes. However, coverage varies by insurer, so reviewing the policy’s small print for specific covered conditions is vital.
Critical illness cover, also known as critical illness insurance, provides a lump sum payment if you’re diagnosed with a specific serious illness. It’s a long-term policy offering tax-free payouts to help cover living costs or mortgage payments when you’re unable to work due to illness.
You should consider critical illness cover if you don’t have savings to cover expenses during illness, your employer doesn’t provide long-term illness benefits, or you want to ensure your mortgage is paid if you become ill.
Yes, critical illness cover is often combined with term life insurance. However, if you claim for a critical illness, the policy may end without a life insurance payout if you pass away later.
Generally, pre-existing conditions are excluded from cover. It’s essential to disclose all health info to insurers for appropriate policy terms.
Life insurance covers death, whereas critical illness provides payout upon serious illness diagnosis, supporting financial stability while you’re alive. Both can be complementary based on personal needs.
Exclusions typically include pre-existing conditions, self-inflicted injuries, and conditions arising from substance abuse. Always check specific policy exclusions with your insurer.
Once a payout is made, the policy usually ends, regardless of recovery. You won’t receive additional payments unless your policy specifies otherwise or combines with ongoing income protection.
Critical Illness Cover – When Do You Need It?
While the prospect of suffering from a critical illness is not something many of us want to dwell upon, it is still important to protect our financial situation should the unthinkable happen.
So, when taking out your mortgage, taking out critical illness cover at the same time should be something you take into consideration. It will provide you with that financial security you need when you are unable to pay your mortgage due to your serious illness.
What is a critical illness policy?
If you are diagnosed with a critical illness during the term of your policy, provided you have kept up with your premiums, you will be paid a tax-free lump sum. When the policy ends, all protection will stop.
Upon taking out the policy, you can decide how long you want it to last. So, you might want to stay covered until your children have grown up, or you might want it to last until your mortgage has finally been paid off. Critical illness coverage is often available as a combined policy with term life insurance. In these instances, you can often only claim once. For example, if you get a cash payout after being diagnosed with cancer, the policy is effectively finished. There is usually no life insurance payout if you die at a later date.
Who needs a critical illness insurance policy?
You should consider a critical illness insurance policy if:
- You don’t have the savings in place to cover your outgoings if you are too ill to work.
- Your employer doesn’t offer a benefits package to cover a period of long-term illness.
- You’re single, and you want a policy to ensure your mortgage is paid should you become ill.
- You have a family, and you want to ensure they are provided for should you become sick.
In theory, most people should consider critical illness insurance, but it can vary from person to person. If you don’t have regular financial commitments or people dependent on your income, then you might not consider it necessary. On the other hand, if you and your family are dependent on your salary, and there are no other means to cover your mortgage payments, then critical illness insurance is the protection you will need.
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Yes, policies can be cancelled, but terms vary. It’s wise to review your contract for detailed cancellation terms, potential refunds, or penalties before deciding.
Usually, the policy pays once upon diagnosis of a covered illness. Some policies might allow multiple claims if structured for severity-based coverage.
Premiums depend on factors like age, health history, and desired cover amount. Smoking, occupation, and personal health assessments can also influence pricing.
Some policies might continue if you move, but it depends on the insurer’s terms. Always confirm before relocating to avoid losing coverage.
Critical illness cover provides a lump sum for specific serious illnesses, whereas income protection replaces a portion of income when unable to work due to any illness or disability. Selecting one depends on personal circumstances and financial needs.
How much cover do I need?
Traditionally, critical illness plans pay out the full amount regardless of how serious your illness actually is. However, some plans offer severity-based cover, where the payout you receive depends on how bad your illness is. When deciding on how much coverage you need, think about what you would lose if you were unable to work due to illness. You should also think about the financial commitments you would still have, such as children or a mortgage. To help you make an educated decision, use our life insurance calculator to figure out how much coverage you might actually need.
What illnesses are covered?
Illnesses will vary between insurers, so it’s vital that you check the small print on the policies being offered before you buy. Common conditions covered include cancer, heart attacks, organ transplants, and strokes. However, some insurers might exclude those cancers that are easily curable, and they might rule out pre-existing conditions, or other illnesses that are deemed less severe.
It’s also worth pointing out that a critical illness and a terminal illness are different things. Most standard life policies will cover those illnesses where you are expected to die within 12 months of diagnosis. If you do decide to pay for critical illness cover, you might be able to get it cheaper by combining it with normal life insurance.
Get Advice On Critical Illness Cover
Opting for critical illness cover is your choice. If you decide against it, you might find yourself in financial difficulty down the line, so this is something you need to take into consideration, not only for yourself but for your family too. If you do decide to insure yourself, be sure to check the policies in question so you are fully aware of what is being covered.
For further advice, we would be happy to answer any questions you might have, so please do get in touch with our team.
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