What is critical illness insurance?

Put simply, critical illness insurance will pay a lump sum of money to you if you suffer from a serious illness, such as cancer or heart attack.

Why should I buy critical illness cover?

This lump sum of money can be used for many purposes, but here are the most common reasons people buy this valuable cover:

To keep your home

If you couldn’t work, or were on reduced hours, because of illness would you like to know that your mortgage is repaid, or you have money to pay the rent?

To afford the additional monthly expenses

We are very lucky to have the NHS who will provide you with treatment that, mostly, will be free. Expenses that aren’t paid for, such as travelling to and from hospital regularly, and hospital parking charges, can take their toll on your finances.

To make changes to your home

Surviving a critical illness could leave you with life altering medical problems that require specialist care. The cover can help you to install specialist medical equipment in your home. It can also help pay for changes to your property – such as moving bedrooms and bathrooms.

Repaying other debts such as loan and credit cards

Most loan and card providers no longer provide insurance due to the recent scandal of PPI insurance. If you were unable to work would you like to know your debts are repaid so it’s one less bill to worry about?

What illnesses are covered?

As the name suggests, only illnesses deemed ‘critical’ are covered. Generally speaking, most insurance companies have a list of over 40 illnesses that are covered.

Although policies now have vast number of illnesses that are covered, most claims arise from:

  • Cancer
  • Heart Attack
  • Stroke
  • Multiple Sclerosis
  • Total Permanent Disability

What type of critical illness insurance are available?

  • Level Term Critical Illness Insurance – This means the amount of cover you take never changes. So, if you have £50,000 cover, for example, you would always receive that. Level cover is usually set up to help pay a lump sum off a mortgage, or pay for medical expenses and changes to your home.
  • Decreasing Term Critical Illness Insurance – This means the amount of cover you take reduces each year. This would usually be taken if you have a mortgage where the amount you owe reduces each year.
  • Monthly Income – Critical Illness insurance can also be paid monthly. This is known as ‘family income benefit’. This would pay money to your spouse every month so they can pay the bills and the costs of raising your children.

How much do you need?

Everyone has different financial and personal circumstances. Any critical illness insurance you take should be tailored so that is does exactly what you want it to.

As financial advisers, we’ll look at your mortgage (or rent payments), bills and family costs and then recommend cover that is perfect for you.