What is critical illness insurance?

Critical illness cover is an insurance policy that provides a tax-free one-time payment if you’re diagnosed with or have surgery for a critical illness defined in the policy during its term, and you survive for at least 10 days.

This cover is specifically for the illnesses listed in the policy and doesn’t include others.

The purpose of this insurance is to offer financial support for you and your family during your illness, allowing you to concentrate on getting better without the stress of financial burdens like paying bills.

What’s the difference between critical illness cover and life insurance?

Critical illness cover provides financial support for you and your family if you are diagnosed with a specific medical condition.

It offers a one-time payment to help with treatment costs or to manage regular expenses.

This type of insurance typically doesn’t include a payout upon death; that’s the role of life insurance. Life insurance is designed to provide for your family after you’re gone, like taking care of mortgage payments or funding children’s education, and it pays out if you die within the policy’s term.

Many insurance providers offer both critical illness cover and life insurance together. It’s important to understand the distinct benefits of each policy before making a decision.

Keep in mind that both life insurance and critical illness cover provide a payout only once upon a valid claim and then conclude. They do not accumulate cash value over time. Also, your coverage ceases if you stop making premium payments.

What is a terminal illness benefit?

Some insurance providers include a terminal illness benefit with their life insurance policies.

This feature allows you to receive your life insurance payout early if you are diagnosed with a terminal illness that matches the policy’s criteria and are expected to live less than 12 months.

Some include this benefit in their life insurance coverage, but not all insurance companies do. Therefore, it’s crucial to carefully review the terms and conditions of any policy you consider with another provider to ensure it meets your needs.

How does critical illness cover work?

The extent of your coverage will depend on how long you want your policy to last and how much you’re willing to pay each month. Ideally, you should have coverage for as long as you have significant financial responsibilities, like an ongoing mortgage or children’s education costs.

Then, you’ll need to decide between level cover and decreasing cover.

• Level cover involves selecting a lump sum that fits your needs and deciding the duration of your coverage. Your monthly payment remains consistent throughout the policy term. This option is suitable if you want to ensure general expenses, any extra costs due to health issues, and other financial obligations are met.

You can also opt for your cover amount to increase with inflation. While this choice might lead to higher monthly payments over time, it ensures the lump sum retains its value in the face of rising living costs.

• Decreasing cover, on the other hand, means the value of your cover reduces each month, but your monthly payment remains unchanged for the policy’s duration. This is a good fit if you aim to cover decreasing debts or loans, like a repayment mortgage, where the owed amount reduces over time.

Who needs critical illness cover?

Critical illness cover is an important decision, especially in situations where:

• Your salary is crucial for supporting yourself and your family.
• You lack sufficient savings to sustain you in case of a serious illness or disability.
• Your employment benefits don’t provide long-term support for extended sickness absences.

How much cover do you need?

Think about the expenses you’d need to manage if you became ill and couldn’t work, such as everyday costs like utility bills and groceries.

If you have a family, level cover can provide the necessary financial security to support them in case you’re unable to work due to health issues. It’s also a way to ensure your family’s needs are met.

Alternatively, you might need a policy to cover your mortgage, often a requirement for mortgage applications. Decreasing cover is good for this purpose as it aligns with the diminishing debt of a repayment mortgage.

For comprehensive protection, it’s common to combine critical illness cover with life insurance. This approach covers a range of scenarios, allowing you to tailor the coverage amount for each policy according to your needs.

Which illnesses are covered?

When considering critical illness insurance, it’s important to remember that these policies do not cover every type of illness.

Typically, they include a range of specified conditions, such as major diseases and health events like heart attacks, strokes, Alzheimer’s disease, and certain forms of cancer, as outlined by standard industry guidelines.

Many policies also extend coverage to children, often at no extra cost, providing additional peace of mind for families. For those seeking broader protection, there are options to include coverage for a wider array of conditions.

It’s always advisable to review the specifics of any policy carefully to understand exactly which conditions are covered. This information is usually detailed in the policy documentation or summary provided by the insurer.

Can you get cover after being diagnosed?

When applying for critical illness cover, most insurance companies will ask about your medical history.

Be sure to tell your insurer about any pre-existing conditions you have at the time of applying for the policy.

Having a pre-existing condition doesn’t automatically disqualify you from getting coverage. However, certain conditions that increase the likelihood of future illnesses might lead the insurer to decide against providing critical illness cover.

What does critical illness cover offer?

Critical Illness Cover is intended to shield you and your family from the financial strain that can come with a critical illness.

This type of policy offers a cash payout if you are diagnosed with or undergo a procedure for any of the specific critical illnesses covered, provided you survive for 14 days post-diagnosis.

The payment can be used for various expenses, such as household bills, childcare, or to help sustain a comfortable living standard if you need to take time off for recovery.

What are the benefits of critical illness cover?

Helps with Important Bills

If a critical illness stops you from working, the money you get can help pay for your mortgage, rent, or medical bills. It’s also useful for making life more manageable after your illness, like making changes to your home.

Tax-Free Money

The money you receive from your claim isn’t taxed. This means you can use it however you need to, without worrying about extra costs.

Covers Many Illnesses

This insurance covers a wide range of illnesses, including several types of cancer, heart attacks, and strokes, giving you broad protection.

Includes Cover for Kids

The policy also covers your children at no extra cost. If your child gets sick with a covered illness, you could receive a payout to help with their care.

What are the downsides of critical illness cover?

No Return if You Don’t Claim

The policy doesn’t have any cash value unless you make a valid claim. This means if you don’t claim during the policy term, you won’t receive any money back.

Doesn’t Cover Death

This cover is specifically for certain critical illnesses. If a successful claim is made, the critical illness policy ends, but this doesn’t affect any separate life insurance you might have.

Not All Illnesses Are Covered

While the cover includes many critical illnesses, there are some that aren’t covered. For instance, not all cancer types are included, deafness is covered only if it’s permanent, and kidney failure is covered only if it requires ongoing dialysis.

To claim, you need to meet the specific criteria set out in the policy.

Cost Varies by Individual

Just like life insurance, the cost of Critical Illness Cover is usually lower for younger people or those in good health. It’s important to choose a policy that suits your needs and budget, and understand that the cover might not be the best option for everyone.

Do I need critical illness cover?

Critical illnesses can strike unexpectedly, impacting anyone regardless of age and significantly disrupting lives.

If you find yourself unable to work due to a critical illness, having a plan to handle the financial strain can be invaluable.

While some might have savings to fall back on or employee benefits to rely upon, others may discover that Critical Illness Cover, with its provision of a lump sum, is a good choice for their financial safety net.

How much critical illness cover do I need?

When thinking about how much critical illness cover you need, look at your situation, how much you can easily pay each month, and whether you want a one-time cash payment or ongoing monthly benefits.

It’s hard to guess when you might get critically ill, so knowing how much cover you need can be tough.

A good way to start is to think about how much money you and your family would need if you couldn’t work because of a critical illness. Would you need to pay for your house, bills, or childcare? If things change later, you can always look at your cover again and change it.

How much does critical illness cover cost?

The cost of your premium can differ greatly, so the best way to know what you might pay is to get a quote.

Here are some things that will affect how much you pay:

• If you smoke or have smoked in the last year.
• How old you are.
• How much cover you need and for how long.
• Your health and way of life, like your weight and your family’s health history.
• Your job – some jobs are considered riskier and might cost more to insure.

What’s the difference between life insurance and critical illness cover?

The main difference between life insurance and critical illness cover is that life insurance provides financial support after your death within the policy term, while critical illness cover helps lessen the financial burden on you and your family if you’re diagnosed with a critical illness.

You can often add critical illness cover to a life insurance policy for an extra fee, but typically it can’t be added later on.

Here are some other key differences:

• Who Controls the Funds: Life insurance usually pays out to your beneficiaries, who then decide how to use the money. With Critical Illness Cover, the payout goes directly to you, allowing you to decide how to spend it.
• Children’s Coverage: Critical Illness Cover often includes protection for your children if they become critically ill, a feature usually not available with standard life insurance policies. Terms and conditions apply.

Remember, these policies are not for saving or investing; they only have value if you make a valid claim.

What is a critical illness?

A critical illness is a really serious sickness or health condition that can change your life. It might make it hard for you to work and pay your bills. These kinds of illnesses can happen to anyone, anytime – they’re very unpredictable.

What does critical illness insurance cover?

In critical illness insurance, the illnesses covered are those specified in the policy. Commonly, these include certain types of cancer, heart attacks, and strokes. However, policies can vary, covering many different conditions or just a few.

It’s important to check exactly which conditions a policy covers before you commit to it. For example, one policy might cover 52 different conditions. Remember, coverage usually applies only if you survive for at least 10 days following your diagnosis or surgery.

Critical illness cover is different from life insurance; it’s not about leaving money when you pass away. If you die, the critical illness policy ends without a payout.

What is a cover amount?

The cover amount is the sum you select at the time of purchasing your policy. Upon a valid claim, this is the amount the insurer will pay out as a tax-free one-time sum, which you can use in any way you need.

Though the policy usually ends after paying out the full lump sum once, some policies also cover less severe conditions and include children’s cover without extra charges. In these cases, the payout for these additional coverages isn’t the total amount, but the policy can remain active as long as you continue paying the premiums.

How to work out how much critical illness cover you need

Figuring out how much critical illness cover you need involves thinking about the expenses you’d need to cover if you couldn’t work due to a serious health condition. Consider costs like:

• Your mortgage or rent payments.
• Any ongoing loans.
• Childcare or other expenses for people who depend on you.
• Regular bills such as utilities, council tax, and car insurance.
• Medical costs for things like making your home more accessible or travel to the hospital, and possibly private healthcare.
• Day-to-day living expenses, including groceries and fuel.

Once you’ve listed these, think about:

• Any savings or assets you have that you could use.
• Whether you would qualify for any government benefits like Employment and Support Allowance.
• If you have an employee benefits package that includes sick leave for a long period.

This should give you a rough idea of the payout amount you would need, which you can then use for getting a quote. If you’re unsure, it might be helpful to talk to a financial advisor. Remember, the amount of cover you choose should fit your and your family’s financial needs.

How much can you expect to pay?

The cost of critical illness cover depends on your individual circumstances, so it’s key to choose a policy and cover amount that fits your specific needs. What’s right for someone else might not be right for you.

The price of your cover can be influenced by several factors, including:

Your policy

• The length of time you want your policy (the policy term)
• the type of policy you choose
• Whether your cover is level, decreasing, or inflation-protected
• Whether the policy is just for you or if it includes a partner

Your Personal Details

• Generally, the older you are when you start the policy, the higher the premium
• Riskier occupations may lead to higher premiums
• Factors like smoking and your family’s medical history can affect the cost

Remember, maintaining your cover depends on keeping up with your premium payments. If you stop paying, your cover will also stop.

How to choose between decreasing and level cover

Decreasing Cover

Choose decreasing cover if your main goal is to pay off a repayment mortgage or a long-term loan in case of a critical illness.

This type of cover is named ‘decreasing’ because the amount of cover reduces over time, just like the remaining balance on your mortgage or loan, making it less expensive than level cover. Your premiums are fixed, and you pay them monthly for a set period.

Level Cover

Level cover is suitable if you need a lump sum for other expenses like ongoing rent or mortgage payments, childcare, regular bills, or unforeseen costs related to a critical illness. With this option, both the cover amount and your monthly payments stay the same throughout the policy duration. This means the premiums are higher compared to decreasing cover, as the payout amount doesn’t reduce over time.

You also have the option to adjust your cover to account for inflation, ensuring the value of your lump sum keeps up with the cost of living. Although this can lead to higher monthly payments, it protects the payout from losing value over time.

Should life insurance and critical illness cover amounts be different?

If you’re considering both life insurance and critical illness cover, it’s important to note that they serve different purposes and are often separate policies. This means you can choose different amounts of coverage for each.

Critical illness cover is there to support you financially during treatment and recovery from a serious illness. This could be for a short period or longer. On the other hand, life insurance is designed to provide for your loved ones after your death.

As the two types of cover address different needs, the amount of critical illness cover you need might not be the same as your life insurance. When getting a quote, try different cover amounts to see which premiums are manageable for you. Just ensure that the chosen amount meets your realistic needs.

If you’re uncertain about the right amount of cover, talking to a financial adviser can be very helpful.

What is critical illness insurance for mortgages?

Critical Illness Insurance for Mortgages is a special kind of insurance designed to help cover your mortgage payments if you get diagnosed with a serious health condition, like certain cancers, heart attacks, or strokes.

If you become critically ill, this insurance pays out a lump sum that you can use to pay your mortgage, ensuring that your home is secure even when your health might prevent you from working and earning your regular income.

This type of insurance is especially helpful for protecting your home and providing financial peace of mind during challenging health situations.

How critical illness insurance protects your mortgage

Critical Illness Insurance protects your mortgage by providing financial support in the event you’re diagnosed with a serious illness covered by the policy.

Here’s how it works:

• Payout on Diagnosis: If you’re diagnosed with one of the critical illnesses listed in your policy, the insurance pays out a tax-free lump sum.
• Mortgage Payments: This lump sum can be used to cover your mortgage payments. This is especially important if your illness affects your ability to work and earn an income.
• Financial Security: By ensuring that your mortgage payments can be made, this insurance helps maintain your living situation and prevents the risk of losing your home due to financial strain from unexpected health issues.
• Peace of Mind: Knowing your mortgage is covered in the event of a critical illness can provide significant peace of mind, allowing you to focus on your health and recovery without the added stress of financial worries.

Choosing the right coverage for your mortgage

When picking the right Critical Illness Insurance for your mortgage, here are some things to think about:

Understanding your mortgage and coverage needs

Choose insurance that matches what you still owe on your home. This ensures it can fully cover your mortgage if you fall ill. The insurance should last as long as you have mortgage payments to make. If you already have a good amount of savings or other income sources, you might not need as much insurance coverage.

Think about your personal and policy factors

Pick a monthly payment that fits your budget. More comprehensive coverage typically costs more. If your family’s health history or your own health puts you at a higher risk for critical illnesses, consider getting more extensive insurance.

Ensure the policy covers a variety of illnesses, especially ones you might be more likely to face. Also, if there are changes in your life, like a decrease in your mortgage amount, you might want a policy that can adjust accordingly.

Critical illness insurance vs mortgage protection insurance

Critical Illness Insurance and Mortgage Protection Insurance are both important, but they’re different.

Critical illness insurance

• Pays a lump sum if you’re diagnosed with a serious illness covered by the policy.
• The money can be used for anything: paying bills, everyday expenses, or your mortgage.

Mortgage protection insurance

• Specifically designed to pay off your mortgage if you pass away or are too ill to work.
• Ensures your mortgage is covered, relieving your family from worrying about house payments under difficult circumstances.

So, the main difference is what they cover. Critical Illness Insurance helps with many expenses during serious illness, while Mortgage Protection Insurance is focused just on your mortgage if you pass away or can’t work.

How much cover do I need for critical illness cover for mortgages?

When figuring out how much critical illness cover you need for your mortgage, consider the following points:

1. Mortgage Balance: The amount of coverage should at least match your remaining mortgage balance. This ensures that if you get critically ill, the insurance can cover your entire mortgage.
2. Other Financial Responsibilities: Think about other expenses you might have, like bills, childcare, or living costs. You might want enough cover to help with these too, not just the mortgage.
3. Your Budget: Look at what you can afford to pay in premiums. More coverage usually means higher premiums.
4. Income Replacement: If your salary is key to paying your mortgage, consider how much income you’d need to replace if you couldn’t work.
5. Health Factors: Your health condition and family medical history might affect your need for coverage. If you’re at higher risk for certain illnesses, you may want more coverage.

How to apply for mortgage critical illness insurance

Start by finding out the potential costs either online or through an insurance agent.

Filling out the application

Provide personal details like age, job, health status, and whether you smoke.

Answering health-related questions

Be prepared to share information about your health and medical history, which helps the insurer assess your application.

Deciding on your coverage amount

Choose an amount that sufficiently covers your mortgage and meets your financial needs.

Selecting policy details

Decide on the length of your policy and whether you want level or decreasing coverage.

Reviewing and submitting your application

Make sure all the information is correct before submitting your application.

Undergoing the underwriting process

The insurance company will review your application, possibly requesting additional information or medical tests.

Receiving policy approval

Once reviewed, the insurer will inform you if your application is approved and provide the details of your premiums.

These steps will guide you through the process of applying for Mortgage Critical Illness Insurance, ensuring you get the right coverage for your needs.

What is the cost of critical illness insurance for mortgage payments?

The cost of Critical Illness Insurance for mortgage payments varies based on several factors:

1. Amount of Cover: The more coverage you need (to match your mortgage amount), the higher the premium.
2. Policy Term: Longer policies generally cost more.
3. Type of Policy: Level cover tends to be more expensive than decreasing cover because the payout amount doesn’t reduce over time.
4. Your Age: Premiums usually increase as you get older.
5. Health and Lifestyle: Your overall health, whether you smoke, and your family medical history can impact the cost.
6. Job Risks: If your job is considered high-risk, this might also affect the premium.

Remember, each person’s situation is different, so premiums can vary widely. Getting a personalised quote will give you the most accurate idea of what you’ll pay for your specific circumstances.

What’s covered in mortgage critical illness policies?

Mortgage Critical Illness Policies typically cover a range of serious health conditions and events, which can vary between policies.

Commonly included are certain types of cancer, heart attacks, and strokes. However, the specific illnesses covered can be broader, extending to conditions like multiple sclerosis, kidney failure, or paralysis.

The key is that these illnesses are severe enough to impact your ability to work and pay your mortgage.

Some policies also cover surgeries such as organ transplants or bypasses. It’s important to read the policy details carefully, as each insurer may have different definitions and exclusions for what illnesses and conditions are covered under their critical illness policies.