What would happen to you and your family if you, or the main earner in the family, were to suffer from a critical illness? Would you cope financially? If so, for how long? With you five times more likely to suffer from cancer or a heart attack than you are to die before the age of 65, its surprising that nearly 85% of the UK have no cover at all.
What is Critical Illness Cover?
Critical Illness Cover is designed to pay out a tax free lump sum in the event that you are diagnosed with a specified illness during the term of your policy.
Why do I need critical illness cover?
In a time of great emotional stress, a Critical Illness policy can provide financial support to maintain you and your family’s quality of life by:
- Repaying all or part of your mortgage
- Replacing your lost earnings
- Paying for household bills and mortgage repayments
- Covering the cost of private medical care or specialist treatment
- Paying for a holiday to recuperate after treatment
- Paying for alterations to your home/car to accommodate your capabilities after illness
What does it cover me for?
The most common claims are made for Cancer, Heart Attack and Stroke, however a comprehensive policy will cover you for typically 30-40 and up to 154 illnesses and may also include other illnesses such as Multiple Sclerosis, Alzheimer’s Disease, Deafness, Blindness or Loss of Limbs. Life Assurance can also be included.
Most Critical Illness policies may look similar, however each insurer will have their own individual policy with a different list of conditions and added benefits. At Blue Moon we look at the illness definitions small print in depth to make sure you are getting best value for money.
What should I consider when buying a critical illness policy?
While price is important, it is worth considering value for money rather than just looking for the cheapest. Having a comprehensive policy is essential, and therefore the number of conditions on the policy is a good place to start, however they should not be your only comparison for quality of cover.
ABI+ Definitions will be Critical Illness definitions which exceed the standard set by the Association of British Insurers, effectively making the definition easier to claim on. Some policies currently include up to nine ABI+, so this is something to look out for.
If you are a parent, Children’s Critical Illness is an important benefit which is designed to pay out a lump sum of usually between £15,000-£25,000 if your child is diagnosed with one of the specified illnesses. This is usually included free as part of your policy. The eligibility and amount of pay out will differ between insurers, so we can help you to decide which policy suits you best. This cover is placed fourth on the list of definitions most claimed for, after heart attack, stroke or cancer so it is a very real risk.
Total & Permanent Disability cover is often automatically included, however sometimes it is an optional extra. This is an extra definition which will pay out a lump sum if you are suffering from a condition which is not listed within the policy, but renders you totally and permanently disabled, subject to meeting the policy’s specific definition.
Some Insurers may have other free additional benefits, such Mastectomy Cover, Low Grade Prostrate cancer cover or accidental hospitalisation benefit which may payout smaller lump sums if you are eligible without affecting your overall benefit.
It is important that you do not confuse Critical Illness cover with Terminal Illness cover. Terminal Illness should be free within a normal Life Assurance policy. It is often a definition on a Critical Illness policy too. Click here to see the difference.
Overall, you are five times more likely to claim on a Critical Illness policy than a Life Assurance policy. For this reason, Life Assurance policies will be a lot cheaper than Critical Illness Cover, however do not be automatically put off by price.
A smaller lump sum of Critical Illness, which fits to your budget, a couple of times your annual salary perhaps, may be significant enough to keep you and your family financially supported during such a difficult time.
Instead of a lump sum, it is also possible to receive the payout as a monthly amount, called a Family Income Benefit – this is an option you will need to discuss with one of our advisors.
Having life assurance is a cost effective way of protecting your family; however as suffering a Critical Illness is a more likely occurrence, Critical Illness Cover should be an important consideration for anyone looking to protect their family’s financial future, if the worst was to happen. Sometimes, it does happen. Click here to read a letter we received from one of our clients when he had to claim.
For a no obligation home and contents insurance quote simply give one of our advisers a call on 01933 303020. Or alternatively, please browse our site for more information on the various types of insurance we can provide. If what you want is not listed above, please call our friendly advisers who can guide you through the complicated world of Insurance.