It’s obvious that anyone with dependents should have life cover. It provides a financial lifeline for them if the worst was to happen to you.
But if the worst does not happen? What if you faced a serious illness that made it impossible for you to work?
There are many illnesses that may not be immediately fatal but can nevertheless have a significant impact on your life.
Recovery may be slow, if it is possible at all. You may never be able to work again – but the bills will still keep coming.
Critical illness cover can help
Critical illness cover is a type of insurance that pays out a tax-free lump sum if you are diagnosed with a serious medical condition, such as cancer, heart attack, stroke, or Alzheimer’s disease. Most policies will list the conditions that they cover, and some even let you choose the types of illness that are included.
If you are then diagnosed with one of the ‘critical illnesses’ it covers it pays out the lump sum agreed when you took out the policy. It is designed to help you cope with the financial impact of your illness, such as paying for medical bills, household expenses, mortgage or rent payments, or replacing a lost income.
Critical illness should not be confused with medical insurance, which is designed to pay medical expenses as they come, allowing you access to private medical treatment.
To set up your cover, you’ll usually need to choose how much you’d want the policy to pay out, and how long you’d like it to last. Like life insurance, your cover can be timed to work alongside life events. For example, you could choose to only keep cover until your mortgage is paid off, keep it until you retire, or leave it running until the upper age limit when the cover automatically ends – which is typically around 75.
What does it cost?
The cost of critical illness cover will depend on various factors, such as:
- The level of cover you want. For example, how much you want the policy to pay out, how long you want the cover to last, and whether you want to cover a long list of conditions or just a limited number.
- Your age and health. The older you are and the more health problems you have, the higher the risk of becoming critically ill and the higher the cost of cover.
- Your lifestyle. The more you smoke, drink, or engage in risky hobbies or activities, the higher the cost of cover. Similarly, if you have a stressful or hazardous job, you may need to pay more.
How it works
The insurer will consider all your details to determine the monthly premium. The riskier you appear the higher the cost. They will usually ask you to complete a health questionnaire during the application process and may ask to review your medical records.
Once the policy is active, you can then make one claim if you’re diagnosed with a specific illness that it covers. It won’t pay out if you die. You need life insurance for that.
If you claim the policy will end. This includes joint policies too. So while two people can be covered, only one will be able to claim.
So, do you need it?
Logically, more people will face serious incapacitating illness than early death, and dealing with critical illness can be costly. While life insurance can provide for your loved one, critical illness insurance can provide for your needs too.
The cost of critical illness cover can vary widely between different providers and policies. Therefore, it is important to compare quotes from different insurers and find the best deal for your needs and budget.
At Continuum we can help find the cover for you. Many critical illness policies are tied in with life insurance, although you can also get standalone cover – so we can help you get the cover you want, and help you integrate it into an all-round financial safety net.
To start getting the financial security you and your family need, call us at Continuum today.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products, you should seek independent financial advice before embarking on any course of action.