Is Critical Illness Insurance a Valuable Investment?
With critical illness cover, you can ensure that you and your loved ones are financially secure in the unfortunate event of a serious illness. Our comprehensive guide covers all the basics and helps you determine whether this type of coverage is a smart investment for your unique needs.
Are you prepared for the unexpected? Critical illness cover is an insurance policy that can provide you with financial protection in the event of a serious illness. Whether it's to cover medical expenses or loss of income, this type of insurance can offer peace of mind and security for you and your loved ones.
Critical illness cover is a financial product that pays out if you fall seriously ill during your employment. If your employer doesn't offer a benefits package that pays out if you fall ill, critical illness cover may be worthwhile to give you peace of mind. It's worth weighing up the pros and cons of critical illness cover before you commit to it:
Advantages
If you're someone who hasn't been able to build up substantial savings, critical illness cover can provide much-needed peace of mind. In the event that you fall seriously ill without warning, the pay-out from your policy can serve as a reliable source of income for you and your family.
In the unfortunate event that you fall critically ill and are unable to work, the pay-out from your critical illness cover can provide crucial financial support. It can help you settle any outstanding payments, such as your loans, and alleviate any financial burden on you and your loved ones.
Disadvantages
It is important to thoroughly review the list of illnesses covered by your insurance provider. Even if your specific illness is listed, it's essential to understand that the extent of coverage may vary depending on its severity.
When considering critical illness cover, it's important to understand that premiums are based on your current health status. As you age and the likelihood of making a claim increases, premiums will increase accordingly.
Did you know that your employer may offer an employee benefits package that includes compensation for serious illnesses? It's worth taking the time to review your current benefits package to see what coverage is available to you.
What is the cost of critical illness cover?
When it comes to critical illness cover, the cost of your policy is influenced by several factors. These include the pay-out amount listed on your policy, your current health status, and your lifestyle choices. As you age and your health declines, the likelihood of making a claim increases, which can impact the cost of your coverage.
It is crucial to consider the affordability of critical illness policy premiums from the outset, as failing to maintain premium payments can lead to your policy lapsing and losing coverage.
It's important to recognize that if you survive to the end of the policy term or decide to stop your coverage part-way through, you may not receive any money back. However, the peace of mind that comes with having comprehensive coverage in place is invaluable in protecting yourself and your loved ones from unexpected financial burdens.
If you're looking for ways to reduce the cost of critical illness cover, making positive lifestyle changes can be an effective strategy. By taking steps to improve your health, such as losing weight or quitting smoking, you demonstrate to your insurer that you are committed to maintaining a healthy lifestyle. This can ultimately reduce your risk of making a claim and lead to lower premiums.
Exclusions to Consider for Critical Illness Cover
Critical illness policies typically focus on the most severe conditions, such as cancer, heart attack, and stroke. While these conditions may not be the only illnesses that can impact your health and well-being, they are often the most significant in terms of their potential financial impact.
It's important to keep in mind that certain conditions may not be covered under your critical illness policy if you have a family history of the illness. Additionally, if you fail to disclose a pre-existing condition that later manifests into a specific critical illness, coverage for that illness may be excluded.
When it comes to critical illness insurance, it's essential to carefully review the policy terms to understand the specific conditions that are covered.
Determining the Right Amount of Critical Illness Cover for You
To determine the amount of critical illness insurance you need, you should calculate the cost of your monthly expenses if you were unable to work because of an illness.
To obtain an accurate quote, you will need to provide the insurance company with an estimate of how much money you would need as a pay-out.
The following are some of the outgoings you will need to consider:
How much debt you'll have when you pay off your mortgage and how much rent you'll pay over time.
The cost of regular bills should also be considered. This includes gas, electricity, council tax and water charges.
If you are paying off a loan over time, include the interest rate you are paying. If the loan is for a car, include the amount of monthly payments and the length of time you have left on the loan.
If you or your spouse was unable to work due to illness, how much money would you need to provide for your children and family?
Medical expenses can be significant, especially if you have to make adaptations to your home or travel frequently for treatment.
What must I tell my insurer before I can take out critical illness insurance?
Before taking out a critical insurance policy, you must disclose your and your family's medical history.
If you fail to disclose prior or existing medical conditions, the insurance company might not pay out on your claim.
A potential insurer may still offer cover for a pre-existing condition, but the premium will likely be higher.
The company will not force you to discuss sensitive medical information in the presence of an insurance salesperson and will instead send it directly to its medical officer.
What conditions are covered by critical illness insurance?
The conditions that critical illness insurance covers depend on the provider. As with any policy, it’s important to read the small print so you know exactly what you’re covered for.
Three core conditions that are covered by insurance include cancer, heart attacks and strokes. Kidney failure, major organ transplants and multiple sclerosis are examples of other conditions that might be covered by insurance.
Some insurance policies cover more than 60 ailments, conditions and injuries. However, even if your illness is on the list of covered items, whether or not you receive a payment will depend on how severe or permanent the condition is.
Some forms of cancer are not covered by critical illness insurance because they are easily treatable and not seen as a significant threat. Some companies won’t pay a claim for cancer until it has reached a specified stage, such as Stage 3 or Stage 4. Similarly, a mild stroke or mild heart attack could be excluded based on severity; if your doctor says you are likely to have a full recovery within six months, then this would be considered too mild an event to warrant coverage.
What does critical illness cover offer that life insurance does not?
Life insurance is a type of insurance policy that provides financial protection for your family in the event of your death. The money can be used for anything, to pay off debts, provide a source of income, or even to help out with costs associated with your funeral.
Whereas critical illness cover provides a lump sum payment if you're diagnosed with a specified illness or disease, as defined in your policy. You can use the pay-out however you like, including paying off debts or making renovations to your home.
Some people think that you must choose between life insurance and critical illness cover, but this is not the case. Some insurers offer critical illness cover as an extra that you can add to your policy, while others may include it as standard.
