What is critical illness cover?

What is critical illness cover?

Critical illness cover is a type of insurance which pays out a lump sum upon diagnosis of a specified illness during the term of the policy. This payout can help support you financially during the policy term, offering peace of mind while you focus on health and recovery.

How does critical illness insurance work?

Critical illness insurance is designed to provide you with financial protection if you suffer a serious illness. It is often taken out alongside life insurance especially when you apply for a mortgage. This way, if you become seriously ill or pass away, your family has some security knowing they can pay off some or all of the mortgage.

You can also buy critical illness cover on its own if you already have life insurance. Any payout you receive can be used however you wish. You don’t have to spend it on your mortgage if you have other ways to cover the payments. For example, you might use the money for private treatment or to adjust your home.

When you apply for critical illness cover, you’ll need to give the insurer details of your medical history. Some policies won’t cover pre-existing conditions, so checking the terms is important.

How much critical illness cover do you need?

Deciding how much cover you need is key. Think about your savings and what benefits your employer might pay out if you’re unable to work. Critical illness cover can either pay out a fixed lumpsum or be designed to reduce in line with your mortgage balance (known as decreasing cover'.

How much does critical illness cover cost?

The cost of critical illness cover depends on several factors, such as your age, health, job, hobbies, and lifestyle.

For example, if you’re older, a smoker, or not in the best of health, your premiums will be higher. On the other hand, if you’re younger and healthy, you’ll pay less.

Premiums are usually paid monthly, and if you don’t make a claim during the policy term, you won’t get any money back when the cover ends. Most premiums stay the same throughout the policy unless you make changes to your cover.

When can you claim?

If you need to make a claim, remember that illnesses often need to reach a certain severity before the insurer will pay out. For example, if you’re diagnosed with cancer, the insurer may only settle your claim if there’s medical evidence that the cancer has become invasive.

What is covered by a critical illness policy?

Critical illness policies usually cover a wide range of serious conditions, including:

●      Cancer

●      Multiple sclerosis

●      Heart attacks

●      Strokes

●      Blindness

●      Deafness

Most policies cover at least 40 different illnesses, but more comprehensive plans may cover even more, such as loss of limbs, Parkinson’s Disease, or Alzheimer’s.

Always read the small print to understand exactly what your policy does and doesn’t cover. Many policies also include cover for your children at no extra cost.

How L&C can help

Our protection advisers can search the whole of the critical illness market on your behalf to help your find the right policy to suit your needs, at the right price. They will compare lots of different quotes to help you find the best possible deal, whether you are looking for life insurance with critical illness cover, or whether you want standalone critical illness cover. An adviser can also explain which other types of financial protection are available. For example, income protection cover pays a regular income if you’re unable to work due to sickness or disability. Some people opt for a combination of different types of protection, for example, life insurance with critical illness and income protection, but an adviser can help talk you through all the various options to help you decide which to go for.