In this article, I will answer a very important question: How much is critical illness cover cost, and what factors affect the price?
Your monthly premiums for a Critical Illness policy will depend on several factors, such as your age and health, lifestyle choices, and whether or not you skydive on a regular basis.
I have put together an article entitled, ‘What Is Critical Illness Cover?’, which I think goes well with this one.
It explains what it covers and why. So, feel free to read it after this one!
How much is this going to set you back?
How Much Do You Want to Be Insured For?
As with other insurance policies, the less you need per month, the less your insurance premiums will cost you.
So, to begin with it makes sense to list all of those things you simply cannot let fall by the wayside should you become critically ill.
- Your mortgage or rental payments
- Any debts
- Bills such as Council Tax and utilities
- Car insurance/tax etc
- Food shopping
You will also have to consider any savings you might have or other benefits you might receive now or in the future, that might tide you over for a while.
It might mean going without the little extras and treats for a while, but once you’ve figured out those absolutely essential monthly payments it will be easier to work out how much Critical Illness cover you need to cover the cost.
But what about the length of your policy?
How Long Do You Want Your Critical Illness Cover To Last For?
When it comes to deciding on the length of policy you want to take out it will, yet again, depend on your personal circumstances – and budget!
It goes without saying that the longer you take the policy for, the more it’s going to cost you.
So when it comes to deciding on the length of your Critical Illness Cover, what do you need to consider?
1. Your Mortgage
These are monthly payments that need to be met whether you fall critically ill or not, and there can be added stress if you are the main (or only) breadwinner and are suddenly unable to work.
The length of your Critical Illness coverage should be equal to the length of the mortgage, so you are always covered should the worst happen.
You can always decrease your amount of Critical Illness cover If your mortgage happens to be paid off.
2. Your Children
If you have children, you’ll have to consider how long they will be financially dependent on you, for example until age 21?
It makes sense to have a longer policy if they are very little, than if they’ll be moving out next month (champagne’s in the fridge right?!), especially if you are the main wage-earner in your household.
3. Your Retirement
You may simply want a policy in place until you retire… I’ll let you work out the maths on this one!
How Will My Age Affect The Cost Of My Critical Illness Cover?
As I briefly mentioned earlier; as you age your monthly premiums will increase as the likelihood of you becoming critically ill naturally increases.
Critical Illness policies usually have a maximum age limit, which is why it is always best to take out insurance when you are younger.
Once you have taken a policy out, in most cases your premiums are then fixed and guaranteed not to increase all the time you keep the policy in place.
So, how old is TOO old to get covered?
A lot of Critical Illness policies can only be taken out if you do it before your 64th birthday (one company does go up to age 74).
On top of this if you buy a policy before your 64th birthday, most companies will only insure you until your 70th birthday. (though some will insure you up until your 80th birthday)
So, for example if you are a 50-year-old, in most cases you can only take out a 20-year Critical Illness policy.
The later in life you take a policy out, the more it will cost you… simple
How Will My Health Affect The Cost Of My Critical Illness Cover?
I know I’m stating the obvious here, but your premiums are going to be lower if you are healthy.
Critical illnesses typically pay out on a range of illnesses. I have highlighted a few of the common ones below such as:
- Types of cancer
- Heart attack
- Kidney failure
- Liver failure
- Major organ transplant
- Traumatic brain injury
If you have suffered from one of these conditions in the past you will find that it is unlikely your policy will cover you if you should suffer again.
This isn’t to say that you wouldn’t be able to get Critical Illness insurance – just that there will probably be a clause stating you are not covered against that particular illness, or you could easily see your premium increased.
If you suffer or have suffered with any of these conditions (and this is by no means a long list), the insurance company will need to know about it in order to work out how it will affect your premiums.
To what degree your premiums will be affected will depends on things such as:
- Date of diagnosis
- Whether your condition is chronic, viral, or acute
- Whether you take medications
- The severity of your condition
Some of the illnesses I have listed are more common than others, with heart attacks and strokes being among the most common critical illnesses claimed for.
If you lead a lifestyle that makes you more predisposed to those types of conditions, it’s likely to have an impact on the premiums charged by the insurance company!
How Will My Lifestyle Choices Affect The Cost Of My Critical Illness Cover?
I’m really not going to reveal any big secrets here – if you lead a lifestyle that means you are more likely to suffer a critical illness, then your monthly payments are going to be much higher.
See, told you.
Now obviously I’m not talking about the odd curry or glass of wine on a Friday night, but I am talking about when it’s regular and excessive enough to be affecting your health.
And it’s not just food and drink, it’s also the big one…. you know what I’m going to say…
Yep, that’s the one. I’m not going to give you an anti-smoking lecture here, you know the score (but I am shaking my head and silently judging you), and it goes without saying that your monthly premiums for a Critical Illness policy will be substantially higher for a smoker than a non-smoker.
This is simply because smokers are at a higher risk of heart attacks, strokes, and cancer than non-smokers.
2. Diet and Exercise
You don’t need me to tell you that if you are sitting around eating cream cakes all day and get out of breath walking to the front door that you are not in optimum health.
Most people enjoy a drink here and there, and in moderation this habit is not going to affect your insurance premiums.
If however you regularly binge drink to excess and your medical records show that a doctor has advised you to cut back or stop, then your monthly payments will be affected.
Don’t do it, kids! It’s not cool
How Will My Family Medical History Affect The Cost Of My Critical Illness Cover?
Normally you can rely on family to only give you the good things in life, however how will your Critical Illness Insurance premiums be affected if they’ve given you something… unpleasant…such as a higher risk of heart attack or diabetes?
The insurer will consider the type of condition, and whether they feel you have an increased risk of being diagnosed with the same condition.
If just one relative has been affected then it might not affect your premiums at all, especially if they were diagnosed in later life.
However, if your mum, an aunt, and all your siblings have been affected you can be sure it will be a factor when calculating your premiums.
It might be that instead of your monthly payments being higher your policy might simply have an exclusion for the condition in question.
It does depend on the condition, but an exclusion clause is often a more likely scenario than the increased premiums.
How Will My Job and Hobbies Affect The Cost Of My Critical Illness Cover?
Once again, I’m not about to tell you anything now you probably couldn’t guess, but if you spend your free time wrestling with alligators your premiums will be pretty high.
This is because you are more likely to lose a limb than someone who spends their weekends visiting stately homes.
The same applies to jobs; some are just more high-risk than others, such as:
- Agricultural workers
- Oil rig workers
- Army recruits
In a nutshell, any occupation (or hobby) where you are likely to be working at great heights, with dangerous chemicals or machinery, jumping off stuff, or getting shot at will result in higher monthly premiums.
Below I have created a table that
will give you some example costs:
Non-smoker, no medical conditions and no family history example*
|£100,000*||20 year level cover||20 year decreasing cover||20 year Income plan|
|30 years old||£24.78 per month||£15.80 per month||£12.51 per month|
|40 years old||£51.17 per month||£29.72 per month||£21.42 per month|
|50 years old||£109.13 per month||£68.11 per month||£46.14 per month|
|60 years old||£296.66 per month||£205.24 per month||£129.21 per month|
If you are reading this and you know you have some medical conditions which will affect your premiums, please give More Than Money a call and we can find the very best Critical Illness Cover to suit your needs.