Critical Illness Cover – explaining the options

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Critical Illness Cover – explaining the options

Contact us today for an initial conversation, free of charge. It’s hard to think about, but many of us will be diagnosed with a serious illness during our lifetimes. Medical treatment and recovery can impact our ability to work – so what would that mean for our financial situation? Critical illness cover is designed to relieve that worry and provide financial support when you need it most. 

What is critical illness cover?

Critical illness cover is a form of insurance that pays you a tax free lump sum if you are diagnosed with one of a long list of serious medical conditions.

That money can help cover loss of earnings if you’re unable to work, enable you to seek private healthcare, or help you adapt your home as you adjust to the illness. 

What is covered by critical illness cover?

On average, a critical illness policy will name around 40 illnesses and conditions that are covered. These typically include various types of cancer, stroke, heart disease, motor neurone disease, Parkinson’s and permanent disability.

Illnesses covered will vary from one insurer to another and you should check the policy terms and conditions carefully.

Am I eligible for critical illness cover?

All UK residents over the age of 18 are eligible for critical illness cover. If you already have a serious health condition not all insurers will cover that, but you can still gain cover for other illnesses. 

You must give your insurer full details of your family’s medical history. If you leave anything out and then later try to make a claim, your insurer may refuse to pay out. As an example, if you have previously had a heart attack and are later referred for a bypass, your insurer needs to have been aware of the initial heart condition to pay your claim.

Can I get critical illness cover for my children?

Many policies will allow you to add children to the cover, and some insurers will not charge any additional premium for this. In a typical policy, children will be covered for the same core illnesses and conditions as adults. Some policies may also include some child-specific illnesses or disabilities such as cystic fibrosis or Down’s Syndrome.

How does it differ from life insurance?

The main difference is that critical illness cover pays out while you are alive – it doesn’t just benefit the family members you leave behind. 

Because of that, it’s a form of insurance that can benefit single people with no dependents, who might decide that life insurance is not relevant to them. If you were to be diagnosed with a critical illness, the payout could help cover living costs such as your rent or mortgage if you’re unable to work.

Another option to consider is income protection insurance, which will pay you a monthly income if you cannot work due to illness or injury. A financial adviser can help you decide what would suit you best.

Can you combine life insurance and critical illness cover?

Yes – it’s quite common to buy life insurance and critical illness as part of the same policy. It will involve an extra cost but keeps things simple. 

If you already have life cover, you can choose to buy critical illness separately, or take out a new combined policy. A financial adviser can do the research for you and find you the most effective route to getting the cover you need.

It’s also worth noting that life insurance will often pay out on diagnosis of a terminal illness. So if you develop a very serious illness you will receive the money while you are still alive.

How much should I budget for critical illness insurance?

How much to spend is very much a personal choice. You will need to balance the amount you would receive on diagnosis of a serious illness with what’s affordable to you on a monthly basis. 

How do I get critical illness cover?

While critical illness insurance is available to buy online, we strongly recommend seeking advice from a broker like First Thought Financial. We will ask you about your specific situation and ask the right questions to recommend cover based on your financial commitments. We will also make sure that you fully understand the terms and conditions of your policy.

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