How Does Critical Illness Cover Work?

How Does Critical Illness Cover Work?

1 Oct 2019

Whilst it’ll put a real downer on your day to think about you or any of your loved ones becoming critically ill, it can and does happen. It’s not fun to consider the ins and outs of what you’d lose if you were to get sick, but think of critical illness cover like car insurance: you pay every month or year for it and hope you never ever need to use it, but you feel better knowing it’s there. Just in case. 

What is critical illness cover?

Critical illness cover pays a tax free lump sum if you’re diagnosed with a critical illness during the term of the policy. This helps your dependents who rely on your income, whether it’s just you and a partner or you and a whole bunch of little ones. You can decide on the length of the policy: many people choose to have cover until their kids have flown the nest, until the mortgage is paid, or until they plan to retire.

You can also buy critical illness cover combined with your life insurance policy, but be aware that you can only claim against this once - so for instance if you were to become sick and claim money, your family then wouldn’t get a pay out if you were to pass away. 

Remember that critical illnesses are different to terminal illnesses - cheerful topic, we know. Critical illness cover works on the assumption that you’ll be back on your feet eventually. Terminal illnesses - where you’re expected to pass away within 12 months of your diagnosis - tend to be covered by life insurance policies.


Who needs it?

Realistically, basically anyone with any financial commitments could benefit from critical illness cover. If your family relies on your income or if various financial obligations take up a big chunk of your pay, then critical illness cover could definitely be a saving grace for you in a difficult time. 
Another consideration to make is whether or not your employer provides any sort of benefits package for if you do find yourself sick. Whilst some people are lucky, many find themselves struggling to keep up with various payments when they’re off work for a substantial amount of time. 

The money provided by critical illness cover not only goes towards the costs you had before you were sick, but by any costs that being ill creates, like changes made to your house or car needed during recovery. 

How much cover do you really need

Think about what you stand to lose if you were to fall ill. These are the things that critical illness cover protects and safeguards for you. Whilst events such as heart attacks, strokes, traumatic head injuries, major organ transplants, kidney failures, and illnesses like Parkinsons, Multiple Sclerosis, bacterial Meningitis and many types of cancer are commonly covered, there are plans that offer different levels of cover and differing numbers of illnesses in your cover.

Usually, your policy will pay out in full when you claim it, regardless of the severity of your illness. However, some providers offer severity based cover, where the amount you receive will depend on how badly you’ve fallen ill. 

You’ll need to give a full and detailed medical history when buying your insurance, which - whilst it may drive your costs up slightly - will ensure your policy actually covers you. If you’re found to have omitted anything or lied then you could lose your pay out, so it’s best to disclose absolutely every detail. 

Finding the right policy for you.

Don't just go for the cheapest policy as you’re likely to find it won’t cover you how you hope, although it’s definitely possible to be covered in the way you want on any budget. You may not need fully comprehensive cover - the right basic policy can probably give you what you’re looking for.

Watch out for the fine print: are the premiums fixed? Are the children covered? Are there exclusions like minor heart attacks, early stages of cancer, or illnesses brought about by pre-existing conditions? Whilst some of these might not apply to you, here at LifeSearch we can help you make sure your cover, well, covers you. Call us on 0800 316 3166 for friendly, fee-free advice.

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