Understanding Critical Illness Insurance

11/07/2022 09:18 | Mortgage Advice
Critical illness insurance

The fortunate among us will never have been required to use critical illness insurance. Why, if you’re lucky you may never have even heard of this type of policy at all. However, in the event of a major health emergency, your critical illness insurance may be the one thing standing between you and a financial crisis. 

A critical illness policy will provide you with a lump sum of money if you are diagnosed with certain illnesses or disabilities. This type of insurance is about far more than simply covering any potential medical costs, and is designed to help you ensure that you are sustained and supported throughout the course of your illness. If you are wondering whether this type of insurance could be of benefit to yourself or a loved one, we’re here to help you find out. 

What is critical illness insurance and who needs it?

Your critical illness insurance policy will pay out a tax-free, one-off payment if you are diagnosed with a condition that is covered within the policy. 

This one-time payment is intended to help you cover the costs of any treatment, your mortgage or rent, additional living costs, or perhaps even changes to your home that will need to be made in order to help you meet any new needs incurred by your condition, such as wheelchair access. Your policy pays out once and then it ends. 

So, you see, critical illness insurance is not simply about covering the costs of your medical treatment. Rather, your policy is designed to ensure your overall well-being and stability, should you fall seriously ill. These policies therefore still have great benefits to offer those of us in the UK, whose medical needs are supported by the NHS

When considering critical illness insurance, it is important to weigh up how feasible it would be for you to support yourself if you are unable to work due to a serious illness. Many of us assume that our employers will support us somehow, or that we will be able to rely on state benefit payments alone. The reality, however, may be starkly different. 

Many employees are not covered by any sort of sickness benefit or medical insurance, and a good deal of employers will move their workers onto Statutory Sick Pay within six months of their absence from work. State benefits, also, may very well not be enough to account for the loss of your income if you are no longer able to work. 

You should consider taking out a critical illness policy, therefore, if any of the following apply:

  • You and your family rely first and foremost on your income
  • You are not in possession of enough savings to tide you over, should you become seriously ill and unable to work
  • You don’t have an employee benefits package to cover a longer time off work due to a serious condition

Understanding Critical Illness Insurance

Which illnesses will your policy cover? 

Critical illness insurance will provide you with your payment in the event that you fall ill with one of the medical conditions that are listed in your particular policy. 

The conditions covered can vary greatly from insurer to insurer. The most comprehensive critical illness policies, however, can cover up to 50 different conditions or more. Some policies, however, may be far more limited in their scope. 

Strokes, heart attacks, Parkinson’s, Alzheimer’s, multiple sclerosis and traumatic head injuries are just some of the conditions that are commonly covered by a standard critical illness policy. Most policies will also account for permanent disabilities that arise as a result of illness or injury, too. 

A standard policy will typically state how severe the condition must be, in order for you to qualify for your pay-out. 

What variables will affect the cost of your policy?

Monthly premiums can vary hugely depending on a number of factors. The nature of the policy and your own personal circumstances will impact how much you pay. 

The cost of your policy will be impacted by variables such as:

  • Your age
  • If you are currently a smoker or have previously smoked
  • Your overall health and your family’s medical history
  • Whether or not you are employed in a high-risk job 
  • The level of cover you wish to receive 

It’s important to bear in mind that if you are considered to be at high risk of developing a particular condition, perhaps due to existing health issues or your family’s medical history, then this illness may be excluded from your policy. If not, you may be subject to a higher premium as a result. 

Understanding Critical Illness Insurance

How can you purchase critical illness insurance? 

Feeling swayed by critical illness insurance? You’re not the only one. As it stands, this type of policy is currently one of the most popular forms of insurance taken out in the UK. 

If you are keen to purchase a critical illness policy, you can buy one either directly from an insurance company, or through an independent financial adviser, such as ourselves here at The Mortgage Brokerage. By working with a financial adviser, you will be best positioned to secure a policy that suits your needs through the insightful, expert advice that they can provide. 

Looking to create a safety net for yourself in the event of serious illness? The Mortgage Brokerage can help you find a policy that suits your needs and budget. Simply get in touch today to benefit from our expert independent advice.