What is critical illness cover?

Friday 28 April, 2023

Whether you need critical illness protection depends on your situation as well as any existing policies you might already have in place.

Critical illness insurance pays out a one-off, lump sum if you’re diagnosed with a condition or disability that is covered by your policy. It can be offered when someone applies for life insurance – as extra coverage.

In a similar way to some life insurance plans, critical illness covers a set number of years. You can specify whether you want the payout to rise over the course of the term (so it keeps up with inflation) or the opposite – decreasing because your aim is to cover something specific like your mortgage.

If you’re thinking about critical illness cover, it’s important to speak to your financial adviser who can help you decide how much cover you’ll need and how long the term should last.

What does critical illness cover?

Products vary depending on the provider. Certain illnesses are covered as standard by most insurers, including, cancer, heart attack, stroke, organ failure, multiple sclerosis, loss of arms or legs and Alzheimer’s and Parkinson’s disease.

Some providers may allow you to add additional illnesses to your policy, which you’ll pay more for. Your children could also be covered as part of your policy so it’s worth asking your adviser about these options if it’s something you’re keen to have in place.

What does critical illness not cover?

Although a diagnosis of a critical illness can mark the start of a claim in some policies, others may only begin to offer protection once your illness hits a certain level of severity. For example, if you are diagnosed with cancer, payments may only begin when permanent symptoms have been officially diagnosed. Additionally, not all types of cancer are necessarily covered by critical illness protection.

It’s important to work with your financial adviser when reviewing a policy and all the small print before you commit to make sure you are sufficiently covered – and aware of areas not included.

Pre-existing conditions

Just like the life insurance application process, critical illness protection requires you to disclose any pre-existing conditions. If you don’t then your policy could be invalid.

Your adviser can search the market for a suitable plan, but you’ll probably have to pay more in premiums and there will likely be some extra exclusions. The price you pay will vary, based on things like age, occupation, state of health, lifestyle and how much coverage you need and for how long.

Do you need critical illness cover?

There are things to consider if you’re worried about being diagnosed with a critical illness and the impact on your income and ability to keep up with bills (which would not be covered by state benefits when you’re unable to work).

Your adviser will help you look at the following areas:

  • Your employer’s coverage – is there any paid leave for illness or disability and for how long?

  • Do you have an existing life insurance policy and if so, does it have any illness coverage included?

  • Could you consider income protection insurance as an alternative to critical illness?

  • Do you have sufficient savings and investments you could use in place of critical illness cover?

If you want to proceed, it’s important to work with your adviser to see how much protection you’ll need. This means looking at your monthly outgoings and how much you and your family require to live comfortably. You might want to add in any potential costs from medical treatment you may need.

During these important decisions it’s easy to lose track of the small details, which is why your adviser can help make the process easier for you and your family and give you some peace of mind.

Gulay Dugunyurdu, Protection Adviser in Enfield, North London said:

“We can examine your needs and existing policies and then find you the right cover that protects your finances – and your family – should anything happen.”

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