The importance of our health in relation to our finances has never been more apparent than it is now. If you cannot work or earn an income due to ill health then the impact on your ability to be able pay your mortgage, rent and other outgoings can be an additional stress that is not needed. For many, the financial implications of a loss of income and the ability to work are just as concerning as the illness itself. How will I pay my bills? How will I provide for my family? These are just some of the questions that people can find themselves asking when they become ill. And if that illness is a ‘critical’ illness, where the impact of the illness can be greater or the recovery period longer, then the concerns can be even larger.
What is Critical Illness Cover?
Critical Illness Cover is normally long-term insurance cover that pays out either a lump sum or a regular annual income if you are diagnosed with a critical or serious illness which is covered by the plan you have in place. You may use a policy to pay off all or part of a mortgage or cover other costs relating to your condition.
Does every plan cover the same illnesses?
No. While most providers cover similar critical illnesses overall, providers can cover different illness differently, using varying definitions when paying a claim. In this it is important to ensure that you understand what, how and when your cover will pay out. Examples of critical illnesses that might be covered include stroke, heart attack and certain types and stages of cancer amongst many others.
Why do I need Critical Illness Cover?
Only a minority of employers support their staff for more than a year if they’re off sick from work. As the recovery period from a critical illness is normally expected to be years, rather than months and given the low level of state benefits available, everyone of working age with financial or family commitments should consider Critical Illness Cover. Critical illness cover provides financial or family support in the event of being diagnosed with a qualifying condition.
What else can Critical Illness Cover do for me and my family?
In addition to a financial pay out, Critical Illness Cover has evolved over the years to provide additional benefits to policy holders. These could include cover for children, mental health and wellbeing support, physiotherapy and telephone support services and second opinion diagnosis options. These are designed to provide enhanced benefits and value to policy holders throughout the life of the protection plan, as well as the primary financial benefit.
How much does Critical Illness Cover cost?
Factors such as your age, health history, smoker status, lifestyle and terms of cover needed will determine your premium.
How much can Critical Illness Cover pay out?
While most providers will have certain limits on the cover they can provide, we generally find that these are more than sufficient for most people therefore in general you will be able to determine the amount of cover you need and we can assist you with deciding on this in-line with your budget.
The good news is that payments from critical illness policies are made tax free.
When does Critical Illness Cover pay out and what can I use it for?
The majority of providers will look to pay out as soon as possible once you have been diagnosed with a qualifying critical illness. You can use the funds to assist you with meeting your financial obligations and use the funds how you see fit. You may use it to pay off all or part of your mortgage or to assist with medical treatment, travel costs, making changes to your home or new car!
Why is Critical Illness Cover important for the Self-employed?
Critical Illness Cover is one of the most important insurance policies for the self-employed to consider. When you become self-employed you no longer have access to any insurance cover provided by an employer. If, therefore, you become ill or have an accident and are unable to work then your income is likely to cease or be severely reduced. A Critical Illness Policy can provide financial reassurance to see you through a difficult time and support you and your family at a time when your ability to work and earn an income is impacted.
These plans typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse.