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How Much Critical Illness Cover Do I Need?

LifeSearch author Zuky Edgar
3 min read

by Zuky Edgar, Marketing Executive

See author bio

Zuky brings her passion for writing and storytelling to helping customers get all of the information they need to Protect themselves and their loved ones.See author bio

Guide last reviewed 10 Oct 2023

While the basic principle of critical illness cover is easy enough to understand – become diagnosed with a serious illness or injury covered by your policy and you’ll receive a lump sum - there’s a lot of other things that you will need to consider before you go ahead and buy a policy. For one thing, the exact level of cover that you take out will make a massive difference if you ever do find yourself having to make a claim. 

If you haven’t got enough critical illness cover, the payout might not be anywhere near enough to cover your day-to-day costs if you can’t work. But then again, you also don’t want to pay for cover that you just don’t need.

Couldn’t I just get by with life insurance alone?

As life insurance is designed to pay out if you actually pass away rather than if you are diagnosed with a serious illness, it’s hardly ideal if you’re still alive, but struggling to keep up with your financial obligations. 

This isn’t necessarily to suggest that life insurance is utterly useless in such a situation, as some life insurance policies also include terminal illness benefit that you could claim for if it features in yours – although even in this scenario, you usually have to be expected not to survive another 12 months with the illness.

It’s not hard to see why so many people choose to take out life insurance with critical illness cover, instead of choosing between the two. Both products provide pretty vital coverage for before and after you pass away if you become really unwell.

How can I calculate the level of critical illness cover I require? 

At a basic level, a small amount of critical illness cover is better than nothing if you’re worried about developing a serious illness at some point in the future, and the financial consequences that could arise from this.

But if you do suffer a serious illness or injury one day, you’ll hardly want to have to scrimp to get by. You’ll have enough to worry about. It’s worth remembering that technological and healthcare advances mean that we’re all living longer - even with a critical illness. This makes the need for ongoing financial help all the more prevalent. 

So, how much critical illness cover do you need? One rule of thumb for calculating it is to multiply your annual income by three. You might be forced to stop working as a consequence of a serious illness, so the amount of cover should allow you to stop working for up to three years, whilst continuing to pay all of your usual mortgage or rent payments and other bills as you recover. This isn’t necessarily the advice we may give you as it’s down to personal circumstances, and something we can guide you on - but, as we say, it’s a rule of thumb.

Remember to tot up all of your likely expenses

But of course, figuring out the level of outgoings that’ll need to be covered by any critical illness policy you take out isn’t necessarily as simple as just assuming they’ll be the same as they are now. 

Yes, there may be certain current monthly expenses like your rent or mortgage payments, food, transportation, groceries and other costs that you can simply add up to come up with a total, and which might remain around the same as they are now. This can be deducted from the income you would likely get from other sources in a critical illness scenario - for example your personal savings, investments, spouse and/or social security.

What if you have dependents, though? It may be an ambition for you to help them financially through university, so you might want to account for any money you’re already putting aside for this; at least until they are likely to become financially independent. 

You’ll also need to add the amount you’d expect to spend on medical and homecare bills if you did get ill. We aren’t just talking about treatments here, but also such things as equipping your home with any adaptive or medical equipment that may be needed to help you on your road to recovery.

Have a chat with the LifeSearch team about what you might need 

It can be really difficult to plan for the future - after all, all kinds of things could happen between now and when you might need to make a claim. Your needs could be less than you think, or they could be more.

Find out your critical illness insurance options and get a policy that fits your needs

An expert adviser from LifeSearch can answer your questions, explain what options are available and provide fee-free quotes so you know what's right for you.

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LifeSearch author Zuky Edgar
Zuky Edgar Marketing Executive
A ‘Searcher since 2020, Zuky is a self-confessed ‘book bum’ and has big following for her book blogs and social media accounts. She brings her passion for writing and storytelling to helping customers get all of the information they need to Protect themselves and their loved ones
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