Your Questions Answered on Critical Illness Cover

Figures from the UK’s Office for National Statistics (ONS) show that a man of 65 can now expect to live to 83 on average. For a woman of the same age, life expectancy is close to 86.

It’s good news that people are living longer. But, at the same time, the quality of health that older people are likely to enjoy in those years is deteriorating.

This is largely due to an increase in diabetes, obesity, strokes and lifestyle-induced conditions.

The British Heart Foundation (BHF) now estimates that the number of diabetics in the UK will rise from four million to five million by 2035. And diabetics, it says, are four times more likely to have a stroke or heart attack than non-diabetics.

Cancer rates have increased in the UK too. Since the early 1990s, incidence rates for all cancers combined have increased by around 13%.

The NHS, of course, will provide you with the medical care you need if you fall seriously ill. But it cannot help you care for yourself financially.

This all the more worrying given that the Money Charity estimates that 36% of UK households have no savings whatsoever.

So without a financial buffer, what can you do?

How can You Prepare Financially for Long-Term Illness?

Critical illness cover may be a solution. It can give you the security of knowing that you’ll receive a pay out if you fall ill.

Another option is income protection. This will give you a small salary if you can’t work, which lasts until you retire or the policy ends.

What are the Advantages of Critical Illness Cover?

Critical illness cover can provide a lump sum to manage the immediate impacts of an illness.

You’re free to do what you want with the money. You could use it to pay off debts, cover private medical bills or adapt your home for disability. So it can be a financial parachute in a time of crisis.

What’s Covered Under a Critical Illness Policy?

This depends on the insurer and you should check the small print. Most cover a long list of conditions however. With each of these, the degree of severity on which they will pay out varies.

The main conditions are: brain tumor, blindness and visual impairment, cancer (at a specified stage), coma, coronary artery bypass, deafness, Dementia, Alzheimer's disease, heart attack, loss or paralysis of limb, major organ transplant, motor neuron disease, multiple sclerosis, Parkinson’s disease, stroke and third-degree burns.

Do I need it if I Have Life Insurance?

Possibly, if it is not already included as an additional component in your life insurance policy. But be aware that critical illness and terminal illness are not the same. A standard life insurance policy will normally cover any illness if you’re expected to die within 12 months of diagnosis. Life insurance, however, will not cover a critical illness.

How Many Pay Outs can You Get for Critical Illness?

Usually it’s only one. Some insurers, though, will pay in part if you’re diagnosed with a less serious illness. In this case, you’re then able to claim again if the condition becomes more severe.

How Much does Critical Illness Cover Cost?

The cost of the premiums will depend on your age and state of health and the cost can be built around what you can afford to pay. You should disclose any pre-existing conditions at the time of application. The younger and healthier you are when you take out the policy, the less your premiums will be. Critical illness cover can be cheaper if you take it out alongside a life insurance policy too.

What are Strong Reasons for Taking Out a Critical Illness Policy?

Consider it if:

  • You know you don’t have enough savings to support yourself if you get a serious illness or become disabled
  • You’ve not got an employee benefits package to cover an extended period not working due to sickness

Not sure if critical illness cover is right for you? We’re happy to discuss your situation and suggest the best type of cover for you here.

If,  however,  you’d like advice on finding the most cost-effective product for re-mortgaging under your circumstances, you can get in touch with us here.

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