Critical Illness Cover

Critical illness cover, also known as critical illness insurance, is an insurance policy that provides protection for a wide range of serious illnesses or injuries. It gives peace of mind to the policyholder, as, should they be diagnosed with a covered illness, they will generally receive a one-off, tax-free lump sum payment.

What is Critical Illness Cover

Critical illness policies cover a list of serious illnesses or injuries that could potentially be life-changing. Different policies will cover different conditions, and you, therefore, need to thoroughly review the policy details to ensure it meets your needs.

Critical illness cover should not be confused with life insurance, although these types of insurance product are often sold together. Many life insurance providers will include critical illness cover as an add on to their life insurance policies, and in some instances, it may be included as standard.

Do You Need Critical Illness Cover

Whether critical illness cover is a suitable insurance policy for you will depend on your individual circumstances. The Government does provide benefits should you become ill or injured and are unable to work.

If you are employed, then you may be able to claim Statutory Sick Pay (SSP), through your employer. Currently, SSP pays £95.85 per week (August 2020) for a 28 week period.

If you are unable to return to work after the 28 weeks have elapsed, then you may be entitled to claim other benefits such as Employment and Support Allowance (ESA), Universal Credit or Personal Independence Payments (PIP).

Benefits alone are unlikely to be sufficient to replace most peoples income, and this is where critical illness insurance comes in.

The choice to take out any type of insurance ultimately sits with the individual. If you do decide that critical illness cover is right for you, then you need to review the different policies available and be aware of what is and isn’t included.

You may also want to consider income protection insurance, which may cost a little more, but provides a regular monthly income rather than a one-off lump sum payment.

If you don’t feel state benefits will be sufficient to cover your regular outgoings, or, you would prefer the peace of mind an insurance policy offers then Income Protection may be for you.

What's Covered

Each policy will be different, so it’s essential to read the details before committing. Typically, critical illness cover will pay out a tax-free lump sum if you suffer one of the injuries or illnesses listed in the policy. Some policies may payout different amounts based on the severity of the illness or injury.

Cover for children is often also included in critical illness policies which can be an advantage for parents.

Examples of critical conditions that may be covered include;

  • Some Types of Cancer
  • Heart Attacks/Strokes
  • Loss of Sight
  • Organ Transplants
  • Lung Disease
  • Loss of Speech
  • Deafness
  • Multiple Sclerosis

What Isn't Covered

The insurer will provide details of policy exclusions. Many conditions will need to meet a specified severity before the policy will payout, and the diagnosis of the condition will need to be made by a specialist in the field.

Critical illness cover doesn’t pay out on the policyholder’s death, and most policies will exclude pre-existing conditions.

How Much Does it Cost?

The cost of critical illness insurance will vary from person to person as insurers take into account details of the individual to determine a price. Age is the most significant factor so expect to pay more the older you are.

Factors affecting the cost of critical illness include;

  • Your Age
  • Pre-existing medical conditions
  • Your current health and lifestyle (areas such as smoking and alcohol consumption)
  • The terms of the policy
  • Personal circumstances (such as your job)
  • Family medical history

Summary

Critical illness cover helps provide financial security should you be unable to work due to illness or injury. If you were unable to earn money and the support available from the Government isn’t enough to meet your current outgoings, then this type of insurance may be right for you.

At Elementary Mortgage Solutions, we work with a broad panel of insurers. Our experts will assess your situation and suggest the most suitable policies for you based on your personal circumstances.

If you’d like to discuss critical illness cover or any other kind of insurance, please contact our team.

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