What is critical illness cover?
Critical illness cover is an insurance policy that will pay out a tax-free amount should you be diagnosed with a specified illness or medical condition during the term of the policy.
It can provide ‘peace of mind’ to the policy-holder, so they do not have to worry about their bills or financial responsibilities during, what could be a very stressful time.
Critical illness cover provides an extra form of protection, in addition to a standard life insurance policy; it can be added to an existing policy, or a, a policy that is about to be taken out. FACT: over one in three of all life insurance policies searched for include critical illness cover.
What is the difference between Critical Illness Cover and Terminal Illness Cover?
Life insurance policies normally include Terminal Illness Cover as a standard and so will pay out the sum assured if your doctor has confirmed you have a terminal illness and are likely to die within 12 months.
Critical Illness Cover, on the other hand, is designed to cover serious health conditions from which you may make a full recovery. ☺
What are the different types of critical illness cover?
When a persons takes out critical illness cover, it’s usually either in addition to or combined with a standard life insurance policy
- Additional cover: If you take out life insurance with additional critical illness cover, you’ll receive a pay-out a) if you get a critical illness and b) if you pass away (both during the term of your policy)
- Combined cover: If you take out a combined policy you’ll only receive one pay-out, either if you become critically ill or if you pass away (both during the term of your policy)
How does critical illness cover protect me and my family?
Many people assume that if they do not have children they don’t need cover. However, if you live on your own, for example, you will need to ensure any rent or mortgage commitments are paid each month, plus if you have any bills or living costs they will also need to be paid.
Critical Illnesses Cover protects the policy-holder against certain serious medical conditions: cancer, heart attack and stroke.
However, policies vary widely depending on the provider. For example, the most comprehensive policies may cover you for around 40-50 illnesses, including conditions such as multiple sclerosis, Alzheimer's, deafness, blindness or loss of limbs.
Our FCA Regulated Advisors, will help you navigate through all of the providers, products and policies and explain the variations and permutatiuons between each of them, so you will receive exactly the best policy for you and your family.
Why do I need critical illness cover?
If you don’t have a huge amount of savings, critical illness cover can provide valuable financial support in the event that you become seriously ill.
Your lump sum pay-out could be used to cover some of the following costs:
- All or part of your mortgage/rent
- Lost earnings while unwell
- Household bills and other outgoings
- Private medical care or specialist treatment
Don’t assume that if you don’t have dependants you don’t need cover. If you live on your own, for example, you will need to ensure any rent or mortgage commitments are paid each month.
The last thing you want is to have to worry about keeping the roof over your head when you are unwell, recovering from injury or adapting to incapacity.
How much does critical illness cover cost?
The price of life insurance with critical illness cover depends on a number of factors, including:
- Your age
- Your level of cover
- Your lifestyle, such as whether you smoke or not !
- Your health and medical history
- Your occupation
The younger you are when you take out a policy, the cheaper it is likely to be. For example a level term life insurance policy that includes critical illness cover for someone aged under 25 is £12.99 on average, according to Money Super Market data collected from January to December 2018.
Similarly, the older you get, the higher the cost of critical illness cover - and it rises dramatically once you reach your later years. The average cost of a level life insurance policy with critical illness for someone aged 31 to 35 is £23.69.
It’s worth remembering that certain lifestyle choices could affect the price of your premium. Probably, the biggest influencing factor is smoking. If you’ve quit smoking for 12 months, you could find yourself paying less than someone who does smoke.
If you’re a smoker, you will generally find yourself paying more than non-smokers. When it comes to life insurance, the difference can be significant: smokers pay an average of 63% more than non-smokers.
What should I consider when buying a critical illness life insurance policy?
You should consider the following things before you take out a critical illness life insurance policy:
Level of Cover
Although the cost will obviously be a factor when choosing a critical illness policy, the cheapest option may not necessarily be the most suitable or best policy for you.
It’s crucial that you choose a policy that provides a level of cover you’re happy with, so always check to see the conditions covered.
There are policies that can offer additional benefits. These can include mastectomy cover, low grade prostate cancer cover, or accidental hospitalisation benefit. All of these may pay out smaller lump sums if you qualify, without affecting your overall benefit.
Protection for Children
If you have children, then you may want to consider adding children's critical illness cover to your policy. This will usually pay out a small lump sum, typically between £15,000 and £25,000, if your child is diagnosed with one of the illnesses specified on the policy.
Comparing Critical Illness Cover
Once you’ve decided you want to be covered for critical illness, the next step is to compare life insurance quotes from different providers. Our team of FCA Regulated Advisors will hold your hand through this process, explain anything that you do not understand and will inform you of the different benefits attached to the offers from different providers, which means you’re much more likely to find the right policy for you at a great price.
When you compare critical illness cover, you can also see what the premiums would cost if you were to remove this option and buy a standard life insurance alone.