In this handy little article, you’re going to learn about what Critical Illness Insurance cover is. What it is, why it’s handy to have it, and what factors can influence the cost of your premiums.
Are you sitting comfortably?
Then I’ll begin…
What Does Critical Illness Insurance Cover Do
In a nutshell, Critical Illness Insurance (also known as Critical Illness Cover) pays out a one-off lump sum in cash if you are diagnosed with an illness, such as cancer.
All you need to decide before you take out a Critical Illness Insurance policy is how much you want to be insured for and how long you want to be covered.
Most policies in the UK will cover you from day one of the policy starting, 24/7 and anywhere around the world.
Payments from a Critical Illness policy are not classed as income, so the payout is tax-free. Bonus!
You’ll pay your premium via a monthly direct debit once you’re insured.
With me so far?
Who Needs Critical Illness Insurance?
1. You’re Employed
Not everyone has an employee benefits package that will cover a long-time off work due to sickness or injury, and could you live on it if you DO? Thought not. On top of that, Statutory Sick Pay (SSP) is only £94.52 per week; not nearly enough to cover your bills and household expenses.
2. You Don’t Have Savings
In an ideal world we’d all be saving for a rainy day, but we all know that it isn’t always possible.
If you don’t have enough savings to tide you over if you were to become disabled or seriously ill then Critical Illness Insurance can be an affordable way to ensure that there will be cash to see you through should the worst happen.
3. You’re Self-Employed
Imagine you are a self-employed roofer and you fall from your scaffolding or are taken seriously ill. Who will provide for you and your family?
Benefits take time to apply for and be received, and even then, they are unlikely to be enough to replace your income if you can no longer work.
4. You’re The Main Wage Earner
Maybe you are a one-income family and the full responsibility of keeping a roof over your head and food on the table falls solely to you.
Knowing you’ve been paying a monthly premium into a Critical Illness policy could relieve a lot of potential stress and heartache if you are suddenly unable to work.
Pretty much everyone could benefit from getting Critical Illness Insurance – it’ll ensure you can cover your household of bills and general cost of living. But not only that – there’s the direct cost of being critically ill to consider.
Picture yourself in a wheelchair, you will need to widen the door frames, move the toilet and bathroom downstairs and include ramps. Oh, and buy a wheelchair.
And this is without adding in the cost of changing your car or treatment not covered under the NHS. Who do you think will need to pay for this?
By now you’re probably clamouring for the phone so that you can sort out a policy, but wait…
How Much Critical Illness Cover Should You Take Out and How Long For?
Ok, so the amount of cover you will need will depend on a few things such as:
1. Your Mortgage
How much is owed on your mortgage until it’s paid off?
You might also want to consider what type of mortgage you have; is it one where you’re only paying the interest and it’s not coming down (interest only), or one where you’re paying it all and the house will be yours at the end? (capital and repayment)
This will make a difference to how long and howm much you want the policy for.
2. Your Children
Consider how many children you have and how old they are.
Would you still be able to raise them if you’re seriously ill?
You might want to consider the cost of childcare in your area and how long your children will be dependent on you. For example, if your youngest child is 2, you might want to look at being able to pay for enough child care until they are a teenager
3. Your Monthly Outgoings
It’s always worth remembering that this isn’t necessarily just Council Tax and Utility bills and debt; it’s the weekly food shop, school trip payments, money you might save for birthdays and Christmas, and new clothes and shoes for rapidly growing children!
And the list goes on..
4. Providing A Safety Net
I mentioned above about the cost of being ill, and there is no right or wrong answer to how much you should insure yourself for here.
The cover may depend more on what you can afford to pay in premiums. (Drop us a line, we can run a free price driven quote for you!)
Taking these factors into account should help you to come to some sort of idea of the lump sum you would need for your family to continue their current lifestyle should you be diagnosed with a Critical Illness.
What Conditions Does Critical Illness Insurance Cover Me For?
Most policies cover about 60 conditions on average (some cover over 100, whereas as some cover under 30), the main ones are below:
- Heart attack or stroke
- Certain types and stages of cancer
- Organ transplant
- Conditions such as Parkinson’s disease or multiple sclerosis
- Traumatic head injury
- Invasive surgery
How Many Times Does Critical Illness Insurance Pay Out?
Most Critical Illness Insurance policies only pay out once, although some allow for a smaller payment if you are diagnosed with a less-severe illness, and then let you continue your policy.
You could then, in theory, make a further claim at another time should you be diagnosed with a more serious condition or illness.
How Long Will It Take for The Insurance Company To Pay Out On My Critical Illness Insurance Claim?
To make a claim on your Critical Illness Insurance you need to first provide proof that you are ill and have one of the illnesses covered under your plan.
This can be done in the form of doctors letters, medical files or scan results etc.
You can then expect to be paid around 30 days later.
7 Things That Will Affect My Critical Illness Insurance Premiums?
- The amount of cash you want to be insured for
- How long you want to be insured for
- Your age
- Your health
- Your lifestyle
- Your family medical history
- Hazardous jobs and hobbies might also affect the size of your premiums. (For example, if you’re a pilot or enjoy mountain climbing, then you’re going to be paying more).
Choose a policy that covers your needs, but with monthly premiums you can afford as you are no longer covered if you stop your payments!
It’s also worth noting that there is no cash-in value to Critical Illness insurance if it isn’t used. You won’t get anything back if you stop the policy part-way through.
You can read my article ‘How Much Does Critical Illness Insurance Cost?’ to get an even better understanding of this type of insurance.
At More Than Money we know that insurance is about, well, more than money…that’s why we are dedicated to finding just the right policy to suit your needs and circumstances.
If you want to have a chat about insurance, or need any advice on which policy is best for you, give us a call – we’d love to help.