1. What it Covers?
In general, critical illness insurance covers people who are diagnosed with severe and life-threatening diseases. Once you purchase the policy, if you become critically ill or die from an illness on the covered conditions list, your family will receive benefits.
In case you’re wondering,
The most common type of cover is for cancer, but it may also include other styles such as heart attack, stroke, Parkinson’s Disease, and Alzheimer’s, to name just a few!
This coverage can be precious in recovering lost income that would typically be earned during disability time off work and maintaining financial stability without relying solely on savings or support from loved ones.
It will not only give peace of mind knowing that your finances are safe should something happen, but it makes sense financially too.
Did you know?
A critical illness policy provides an unexpected lump sum payment if you suffer a covered life-threatening diagnosis.
This is important because it offers your family financial assistance when they need to focus on getting well and not worry about how they will manage financially.
Unfortunately, a lot of people think that these policies are expensive. Still, when we look at the benefits, there’s no doubt that it makes sense economically as insurance premiums may seem high initially but over time prove more affordable than other types of cover like income protection which requires monthly payments from deductions made from earnings.
Most people buy critical illness cover when they take out a life insurance policy, and some do it supplementary to their income protection or mortgage repayment plan.
How Does it Work?
Critical illness cover pays a lump sum on diagnosis of one the following:
Let’s have a closer look,
- Heart attack
- Stroke or Transient Ischaemic Attack (TIA)
Heart disease is by far the most common ailment covered.
However, if you have critical illnesses, treatment can be costly, and not all policies will pay out for every condition, so it’s worth reviewing these details before buying.
Let me explain,
For example, some may only provide a payout in terminal cancer, which means that if your cancer has gone into remission and there are no signs of relapse, you would be ineligible to claim under this type of policy.
Another point to note is that premiums change depending on what kind of plan you buy, but typical plans are for a single lifetime or a period of up to 20 years.
2. When to Get it?
The best time to buy this type of insurance is when you feel in good health. This way, if something does happen and you need protection, it’s there for you.
It can also be worth considering waiting until retirement or reaching a milestone birthday such as 55 years old before buying one of these policies, which may make your premiums cheaper because insurers see older adults as less likely to claim, so they’ll charge them lower rates.
Look Out for Exclusions
Some policies will cover you for a certain period, such as up to 20 years or until age 85. These exclusions may apply, and you should know what they are before buying the policy.
You also need to know that this type of insurance won’t pay out if any pre-existing conditions develop after taking out the plan.
If it’s been six months since your last physical checkup, it makes sense not to buy one because coverage starts immediately, so there is no waiting period. However, if there have been more than six months between physicals, then an exclusion may exist.
It’s worth checking which illnesses get covered by these plans, too – some people take them with just cancer in mind, but others can include heart attacks and strokes too.
3. What A Good Policy is
A good policy provides cover for a variety of illnesses and has no exclusions.
It will pay out on pre-existing conditions so long as they have been declared during the application process and the customer pays their premiums in total each year.
The first thing to be aware of is that these plans don’t start paying straight away; you’ll need to wait up to two years before your coverage starts – sometimes longer if you’re over 50 or there are any exclusions like an exclusion for previous cancer treatment.
If this applies, then it may make more sense to take out life insurance instead because, with critical illness cover, you’ll get your payout when ill regardless of how much time passes since taking out the plan. In contrast, payments depend on how old you are when the project is taken out with life insurance.
The second thing to be aware of, especially if you have any dependents or people who rely on your income, is that critical illness cover will cover a percentage of your monthly payment rather than paying out lump sums as life insurance does.
Thirdly it’s essential to know about exclusions because these plans don’t pay for everything – they’ll usually exclude treatments for cancer and other severe illnesses to keep prices down. Still, some providers may offer more comprehensive policies with no exclusions at all.
4. What it Costs
Although providers will offer varying levels of cover at different price points, the average cost for a critical illness plan is around £45-£90 per month.
However, it’s worth noting that you’ll need to renew your policy every year, and it may be necessary to take out life insurance, too – this gives you peace of mind while also covering debts and other living costs should anything happen as well as providing support for loved ones left behind.
The Waiting Period
The waiting period is the amount of time you need to wait before your critical illness benefit kicks in. A common term used for this is a ‘waiting period,’ and it’s usually between one day up to two years.
5. Always Remember
As with any insurance policy, it’s essential to review your cover regularly. This is because the level of cover you need will vary depending on factors such as age and current health status.
On the other hand,
If anything changes that would affect your critical illness protection in any way, then make sure you update this too – for example if you have children or take up an activity like extreme sports, which increases the risk of injury.
Many providers offer critical illness cover, and not all of them will suit you. When choosing a plan for yourself or your family, it’s worth doing some research to find the right one for you – there is no point signing up with an insurer if they don’t provide the best level of protection against illnesses like cancer and stroke.