Critical illness insurance pros & cons

Critical illness cover… yay or nay? Is this insurance product worth your hard-earned wages, or would it be money better spent elsewhere? Sometimes, it can feel like there is an insurance product for everything, and it’s difficult to know which are sensible for you to invest in.

As with anything, there are pros and cons to critical illness cover. Whether or not it’s right for you will depend on your personal circumstances, so be sure to weigh up the good and the bad before making a decision.

Firstly, what is critical illness cover?

Let’s start with a brief explanation of how critical illness cover works. You can claim on a critical illness policy if you’re diagnosed with an eligible serious illness or injury. It pays out a lump sum, designed to cover your regular outgoings such as your mortgage, rent or debt payments, and any healthcare or specialist equipment you might find yourself in need of.

A critical illness policy will last for a predetermined period of time, usually until your children decide to leave home and stand on their own two feet, or perhaps until your mortgage has been paid off and your finances have been freed up a little. You decide.

Critical illness cover cons

So, what’s the catch? Of course, nothing is perfect. There are a few things to be aware of with this insurance product. You won’t be covered for every illness or injury, however some insurers pay out for hundreds of conditions. You can usually expect to be covered for long-term and serious conditions such as a heart attack, stroke, cancer, multiple sclerosis, Parkinson’s disease, or the loss of arms and legs - unless you have suffered any of these previously, as pre-existing conditions won’t be covered. 

Secondly, you might find that a condition may have to reach a certain level of seriousness before you can make a claim. Most insurers will specify how serious your condition must be before they will pay out. That being said, some insurers will pay partial payments for less serious conditions, so it’s always worth talking to your insurer to gauge their stance.

You can find a critical illness cover policy to suit almost any budget, and whilst there are definitely cheaper policies out there, you do get what you pay for. Cheapest isn’t always best. The more conditions included, the more you will likely pay in monthly premiums. If you’re unsure, just get in touch with us at LifeSearch. We should be able to find you a policy to meet your budget, and we’ll do our best to find something that meets your needs.

Critical illness pros

On the flip side, there’s so much to be celebrated about critical illness cover. And of course, the biggest pro is that this cover is there for you when you need it most. No one wants to be diagnosed with a serious illness or injury, and many people might believe it won’t happen to them. The truth however, is that life expectancies in the UK are on the rise [1]  each year. Although this means more treasured moments with our families, it also means we’re more likely to develop various health conditions as we grow older. Critical illness cover takes away the burden of those financial responsibilities and allows you to take time out and recover, by providing you with that all-important lump sum payment - which is tax-free, may we add.

Another plus point is that there’s no need to choose between critical illness cover and life insurance. You can combine critical illness cover with your life insurance policy so that you’ll be covered for all eventualities. Critical illness cover will be here for you whilst you’re still around and in need of a helping hand, whilst life insurance will protect you and your family with a payout should you pass away. 

Critical illness cover can also payout if your children get seriously ill. It’s not something that any parent wants to think about, but should it happen to you and your family, a critical illness cover payout when you’re in need of the extra cash for healthcare, equipment and perhaps a loss of income due to being out of work can be completely invaluable.

Sure, we don’t like to admit it, but none of us are invincible. It’s something that the year 2020 and the Coronavirus pandemic has probably made many of us realise. If you have a family that depends on you and financial responsibilities, then critical illness cover should be on your radar.

References

[1] https://www.statista.com/statistics/1040159/life-expectancy-united-kingdom-all-time/