Serious and critical illness insurance explained
Marchwood IFA critical illness insurance expert explains who should consider applying for serious illness cover. Critical illness insurance which is also known as serious illness cover; provides specific protection for individuals from unexpected loss of income due to serious illness.
Who and why should you consider applying for serious/critical illness cover?
This type of insurance is worth applying for if:
You have a mortgage, loan, credit card balances that aren’t paid off each month or any other form of debt that you couldn’t afford to pay should your income reduce or stop due to a serious illness.
You do not have an employee benefits package that would cover a long absence from work due to having treatment and recovery from critical illnesses such as certain types of cancers, heart conditions and strokes (to name but a few).
You do not have enough savings to cover the cost of living should you become seriously ill or disabled (we recommend at least six months income).
You do not want to rely on employment and support allowance state benefits typically paying out between £70.00 to just over £100.00 per week depending on circumstances, and if you are eligible to receive benefits?
For many a loss of income through serious illness would impact quality of life, and possibly lead to financial hardship.
What types of illnesses does Critical illness insurance cover?
There are many forms of illnesses covered by this type of insurance such as multiple sclerosis, many stages and forms of cancer, heart conditions such as stroke and heart attacks, permanent and total disability, dementia, Kidney failure, Parkinson’s Disease, bacterial meningitis and Motor Neurone Disease and many more. As you can imagine, some providers’ policies are much more comprehensive than others, so it’s vital that you make sure that you get good, informative and independent advice when choosing which product suits you best.
Typically; a one-off, tax free lump sum is paid out to the insured person if they become critically ill with any of the pre-specified conditions covered in the policy. The insurance payment can help with mortgage, rent and other debts, and also the money can be used to adapt a home if a policy holder becomes disabled due to illness.
Very often when people consider critical illness cover, they also think about what might happen to their dependants if they died unexpectedly. Life assurance is generally needed by people that contribute towards household costs including a mortgage and that also have dependents: children, a spouse, or a partner.
Who should consider getting life assurance?
Where someone has children or a partner that rely on their income to pay a mortgage and other costs of living it is likely that they will need life assurance. In most cases life assurance is discussed when a mortgage is taken out. We recommend that life assurance, and other protection policies are reviewed annually to ensure the right level of cover
What is life assurance used for?
Life assurance is generally needed by people that contribute towards household costs including a mortgage and that also have dependents: children, a spouse, or a partner. Life assurance policies ensure that beneficiaries continue to receive income in the event of the policy-holders death. There are two types of life assurance policies: whole-of-life (money is paid out when the policy-holder dies) and term life assurance (the policy lasts for a fixed period of time only such as five, ten or 20 years). Policies can pay out monthly, or beneficiaries can receive a lump sum. The amount of cover that beneficiaries receive depends on the type and level of cover that is bought.
If you are concerned about what will happen to your family’s finances after you die, or if you have concerns about maintaining your standard of living should you fall critically ill, please contact Hamish Gairns our protection insurance expert.
We can explain how critical illness insurance, and life assurance work, and what level of cover you might need.