Critical Illness Cover - What is it?

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Critical Illness cover is a policy that pays out a tax free lump sum if you are diagnosed with one of a range of specified critical illnesses. Sometimes that illness has to reach a certain severity to trigger a pay-out. It usually comes with the same amount of life cover built in, but it can be arranged on its own.

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The impact of being diagnosed with a critical illness can have serious ramifications not just on yourself but your loved ones as well. Although survival rates are constantly increasing you might never fully recover and it can have devastating consequences on your ability to earn and the lifestyle of your household.

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What is it for?

 

When disaster strikes it is inevitable that there are financial consequences and whilst an insurance payout won’t make you or your family member better, it does help reduce the financial strain of a critical illness and allows you to focus on recovering and getting back to as much normality as possible.

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The money generated can be used however it is needed but it is important not to think of critical illness cover primarily as income replacement – that is what income protection policies are designed for.

What you do with this lump sum is completely based on your own situation. For example, it could be used to:

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• Make modifications to your home to maintain your standard of living.

• Pay off or reduce your mortgage or any outstanding debts.

• Pay for private care

• Purchase a modified car or specialist equipment.

• Enabling your partner or a loved one to take some time off work to be with you.

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Basically it is yours to do with as you see fit, some have even used the proceeds to enable them to go on a holiday of a lifetime.

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Are all the policies the same?

 

Most definitely not.

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The critical illness market is complicated; not all providers cover the same conditions or to the same extent, many have free additional benefits or services, differing claims criteria for certain illnesses and different underwriting standards.

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Of course, premiums will also vary from one provider to another so with this sort of policy it is essential that you take advice before starting or changing a critical illness policy.

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This is where we can really personalize the advice to your needs and situation, and it can often prove that the policy that looked cheapest really might not be the best for you. We review your particular circumstances and advise on which insurer’s approach and benefits could provide the most value considering your requirements.