Critical Illness Cover

Why do I need critical illness cover?

The main reason to take out critical illness cover is if you’re concerned about yours and your family’s livelihoods should you fall ill. If you depend entirely or heavily on your salary to support your family or you don’t have significant savings or assets, it’s a good way to ensure you have a safety net. It’s particularly important to consider if you are self-employed.

If you are in full time employment then you probably have some sort of safety net, but it’s worth checking your contract or asking your employer. While many companies will have something in place, there are also many who don’t cover long periods of unemployment due to sickness, or who limit the time they pay you for.

If your employer doesn’t have a good benefits package that will cover you financially should you have a long-term illness that leads to a long period off work then you should think about getting some form of cover.

Doesn’t my life insurance policy already cover this?

No, sorry, it doesn’t. Generally speaking, your life insurance policy pays out upon your death, whereas a critical illness insurance policy does so when you become ill.

The other major difference is that a life insurance policy pays out to the beneficiaries, usually your surviving family and loved ones. Critical illness cover, however, pays directly to you, giving you agency over how you use the money.

What does a critical illness policy cover?

No two critical insurance policies are the same, and different providers will cover different conditions. Therefore it’s advisable to shop around, read the small print or get expert advice if there are particular conditions you want to make sure are covered.

Commonly, strokes, heart attacks and cancer are the core conditions that you can expect to be covered, while you can generally expect coverage for organ transplants, multiple sclerosis, Parkinson’s and Alzheimer’s. Permanent disabilities caused by illness or injury are usually covered too.

Are there any illnesses that aren’t covered?

Often, pre-existing conditions aren’t covered in a policy, or when switching policies. Again, this is on an insurer-by-insurer basis, so it pays to shop around for cover if you want these to be included.

In terms of illnesses that are usually excluded from critical illness cover, these include broken bones, chest pain, hypertension and non-invasive cancers that are treatable and not life threatening. Many other illnesses that are covered have to reach a certain threshold of severity before you’re eligible for a payout. For example, limb paralysis would need to be irreversible and total, while burns would need to cover a certain percentage of the body.

How much does critical illness cover cost?

Several factors influence how much your critical illness cover policy costs you. Some of them are the ones that affect many insurance premiums – age, lifestyle, pre-existing conditions. Losing weight and stopping smoking are two ways to lower the cost of insurance. Premiums will also cost more the older you get, as there’s more likelihood of you falling ill and claiming against the policy.

The other main factor is the amount of cover you want. You can calculate what you need by considering outgoings such as mortgage or rent, debts, expenses, childcare commitments and household bills. The larger the payout you opt for, the more the premiums will cost.

Is there anything else I need to know?

Yes. As with other insurance policies, it’s always a good idea to double check what insurance policies your employer provides. Some companies offer group critical illness cover that you can claim against.

It’s also worth looking at alternatives to critical illness cover such as income protection insurance. The latter provides regular payments of a percentage of your salary and tends to cover more illnesses and injury than critical illness. Critical illness cover, meanwhile, pays out a lump sum. If you’re not sure which is the best one for you, it’s best to seek professional, expert advice.