Critical illness cover
Critical illness cover can provide much needed financial relief by paying you a tax-free lump sum should you suffer with a serious medical condition. Critical illness cover can also help you deal with the financial ramifications of such a life-changing event.
Everyone wants to think that they won’t fall ill or that if they do they’ll be on their feet again swiftly, but this is not always the case and a critical illness could end your ability to work.
The money received from a critical illness claim could be used to:
- Pay off an outstanding mortgage
- Subsidise any loss of income
- Help with therapy costs and private healthcare
- Make modifications to your home
How does critical illness cover work?
Critical illness cover can be bought as part of a life insurance policy and will pay you a tax-free lump sum if you suffer any of a number of pre-defined conditions.
These conditions typically include cancer, coronary artery bypass, heart attack, kidney failure, major organ transplant, multiple sclerosis and stroke. Insurers may also include other conditions in addition to these and some may have qualifying criteria regarding some of these conditions.
If your critical illness cover is combined with your life insurance policy you can opt for different levels of cover for each. For example, you may want a lump sum of £100,000 to be paid when you die but only £10,000 if you suffer a critical illness.
Why would I need critical illness cover?
A critical illness could force you into early retirement or you may not have the capacity to work as many hours as previously. You may even need expensive medical equipment and therapy if your critical illness leaves you with a long-lasting disability.
A critical illness could mean you need to make changes to your home such as improved wheelchair access or modifications to enable you to carry on living independently.
Whilst modern medicine continues to make great advancements in the 21st century, more people now survive critical illnesses for longer. Approximately one in three people will develop some form of cancer in their lifetime and 80% of those will experience a loss of income1.
Is critical illness cover the same as income protection insurance?
Income protection insurance can pay you a monthly benefit if you cannot work due to injury or accident. Income protection insurance will cover critical illnesses but your pay-out will be in the form of a monthly benefit rather than a lump sum. Whilst you may be able to claim multiple times on an income protection insurance policy, once you claim once on your critical illness cover your policy will end.
The pay-out for critical illness cover is not linked to your salary, however income protection insurance is directly linked to how much you earn.
If you would like assistance in comparing both critical illness cover and income protection insurance policies one of our product specialists can assist you in answering your questions.
How much does critical illness cover cost?
The cost of your critical illness insurance will depend on a number of factors, including:
- The amount of money you want your critical illness insurance to pay out
- The range of critical illness conditions covered
- Personal details such as your health, whether or not you smoke, and any family history of serious illness
As critical illness cover is an optional add-on to your life insurance policy the cost of critical illness cover may be as little as a few extra pounds to your life insurance premium.
1 Macmillan, 2014