Being struck by a serious illness can be devastating. As well as dealing with the physical and mental challenges of living with an illness, worrying about how you’re going to financially support yourself and your family can be very stressful.
Taking out critical illness cover ensures that you and your family are taken care of if you become ill or disabled and can’t return to work.
What is critical illness cover?
Also referred to as critical illness insurance, it is in effect, a long-term insurance policy.
Critical illness plans provide a lump sum in the event of you being diagnosed with one of a large number of specified illnesses. The plans can be structured on a term or whole of life basis and, given that we are more likely to suffer a serious illness than to die before we retire, it is perhaps the most valuable element of all protection plans.
This one-off tax-free payment can be used to help with things, such as paying the mortgage, rent, bills, private medical treatment or for any alterations you need to your home, such as wheelchair access.
Please be aware that life insurance and critical illness cover are not the same thing, although they are sometimes sold together. If you’re unsure what your policy covers, please speak to your provider or a wealth management adviser who will be able to help.
It’s also very important to check which illnesses you will and will not be covered for. Typically, illnesses such as stroke, heart attack, certain types and stages of cancer and conditions such as multiple sclerosis are covered. Most policies will also include permanent disability as a result of injury or illness.
Some serious illnesses such as certain cancers and conditions might not be included and it’s also unlikely that your policy will cover any pre-existing health problems. If you have several risk factors for a particular condition (such as family history), you might not be covered or if you are, you may have to pay a higher premium.
Do I need to take out critical illness cover?
If the unfortunate scenario arises where you’re unable to work because of long-term sickness of disability, state benefits may not be enough to replace your income.
Therefore, you should seriously consider taking out a policy if you:
• Do not have sufficient savings to support your family and lifestyle if you were to suddenly lose your income
• Do not have an employee benefits package which covers long-term sick leave
• Are self-employed and do not receive any sick pay
• Have financial commitments that you need to meet. Critical illness cover can pay your mortgage, living costs, bills, debts, medical care and help support dependants.
How much does it cost?
Critical illness cover is usually paid in monthly instalments. How much you will need to pay will depend on several factors, including:
• The level of cover you need
• Who your provider is
• Whether you’re a smoker or have ever smoked
• Your health (factors such as current health status, weight and family medical history)
• Occupation (some jobs are considered high risk and you would therefore need to pay a higher premium).
One of our expert advisers will be able to guide you through the process of taking out a critical illness policy. It’s also good to remember that protection is about more than simply buying a life insurance policy – it’s about optimising the effectiveness of your wealth for the next generation.
Without proper protection in place, you may not be able to guarantee that your wealth is passed to those you intended, in the way you intended. Working with you, our advisers can put together strategies for you to employ to ensure that your loved ones benefit from your wealth in the future.
Get in touch today.