Critical Illness Cover
Critical illness insurance pays out a lump sum on diagnosis of a range of serious conditions, typically including heart attacks, strokes, certain types of cancer and conditions such as Multiple Sclerosis (MS).
Payments are commonly used to pay off the mortgage and other debts, while some people cover other outgoings, which they might not be able to afford if they cannot work.
Why Might I Need Critical Illness Cover?
Many people buy life insurance to leave a payout for their family if they die. However, within a given timescale, you’re much more likely to develop a critical illness than to die.
A critical illness policy could be used to pay for medical treatment, cover adaptations to your home (such as mobility aids, special equipment or structural changes required due to a disability) or to pay off your mortgage. In fact, it can be used for anything.
What critical illness cover doesn’t do is produce a regular income. If you were unable to work due to an critical illness, a good income protection policy would cover your ongoing expenditure. An independent financial adviser will be able to find you the best balance of income protection, life insurance and critical illness cover to meet your individual needs.
How Much Does Critical Illness Cover Cost?
Critical illness cover premiums tend to rise with age, but will also depend on your personal medical history and that of your family. Some policies may charge you less if they exclude a pre-existing condition. Critical illness cover is often sold alongside life insurance. This can reduce the cost of critical illness cover.
Some critical illness cover policies let you choose between guaranteed and reviewable premiums. Policies with guaranteed premiums tend to be more expensive, but payments remain the same throughout the life of the policy. This means guaranteed policies can prove cheaper in the long-run.
Reviewable premiums tend to be much lower at the outset, but prices are likely to rise in the future. This means cover may become unaffordable as you get older, just as the likelihood of falling ill increases. Reviewable critical illness cover policy providers usually review premiums every five or 10 years. Changes in your health or personal circumstances do not lead to premium increases, but advances in medical technology can lead to higher premiums.