When considering whether critical illness insurance is worth the cost, it’s important to weigh the potential benefits against the price.
Critical illness insurance helps to offer financial protection if you’re diagnosed with a serious illness. It covers expenses like bills, loans, or home modifications that may arise while you’re unable to work.
However, the premiums can be expensive, and not everyone will need the coverage. If you’re already in good health, have savings, or get similar coverage through your job, you might find that critical illness insurance isn’t essential.
On the other hand, if you’re worried about how you’d manage financially if you got sick, it could provide peace of mind. In this article, we’ll explore both the advantages and drawbacks to help you decide if it’s a smart investment for you.
What Is Critical Illness Insurance?
Think of critical illness insurance as a safety net that helps cover the costs your regular health insurance doesn’t. It’s there to ease your financial burden during recovery and help with extra expenses that come with being seriously ill.
With critical illness insurance, you get a lump sum of money if you’re diagnosed with a serious condition. While the illnesses covered can vary, common ones include heart attacks, strokes, and cancer. It can also cover conditions like organ or kidney failure.
You can use the payout however you need. Whether it’s paying for everyday expenses, medical bills, treatments, or rehabilitation, the choice is yours.
Some people use the money for home care, quitting smoking programs, or even hiring help for things like childcare or cleaning while they focus on getting better.
Do I Need This Coverage?
A critical illness can happen to anyone, at any age, and it can completely change your life. If you’re thinking about getting Critical Illness Cover, here are some important questions to consider:
- What happens to your income? If you can’t work because of a serious illness, Critical Illness Cover can help. Some people take time to recover, while others need to adjust to new circumstances. How would this impact your income?
- Do you have savings? Some people use their savings to help cover lost income. Can you afford to take time off work, or do you have other plans for your savings?
- Do you get benefits at work? If your job offers health benefits, it might be enough to rely on instead of buying additional coverage. But remember, these benefits only apply as long as you’re employed.
- What are your regular expenses? If you’re debt-free and don’t have many dependents, you might be able to get by without critical illness cover. But if others depend on your income, the cover could be a lifesaver.
Having a plan in place can help ease financial stress if something happens. A payout can also help with extra costs, like making your home more accessible or paying for treatments not covered by the NHS.
Critical Illness Cover: Pros And Cons
Before deciding whether it’s worth the extra cost each month, it’s useful to think about the expenses you’d need to cover if you couldn’t work. Here are some reasons why critical illness cover might or might not make sense for you.
Benefits Of Critical Illness Cover:
- Help with living expenses: If you’re seriously ill and don’t have savings, the payout from your policy can cover your monthly bills, childcare, and other basic living costs.
- Cover loans and debts: While you may be able to take a break from paying your mortgage or loans, that relief won’t last forever. Critical illness cover can help replace lost income and keep you on track financially.
- Home adjustments: If you need to make your home more accessible due to your illness, the cost can add up quickly. Critical illness insurance can help cover these unexpected expenses.
- Tax-free payout: The lump sum you receive is tax-free, meaning you get to keep the full amount without deductions.
- Coverage for your children: Many policies also cover your children, paying up to £25,000 (or 50% of the main cover amount, whichever is less) if they become seriously ill, up until their 21st birthday if they’re in full-time education.
Disadvantages Of Critical Illness Cover:
- Not all illnesses are covered: While most major illnesses are included, some may not be. Be sure to check what is and isn’t covered before purchasing to avoid surprises.
- Pre-existing conditions may be excluded: If you’ve already had a condition like cancer, your policy might not cover it, or you may face higher premiums.
- It depends on how severe the illness is: The policy may only pay out for certain stages of an illness, so you’ll need to carefully review the policy details before making a claim.
- It can be expensive: The cost of coverage increases with age, smoking, and health status. Premiums can be high, especially if you’re older or have health issues.
- No payout if you don’t make a claim: If you don’t suffer from a serious illness during the policy’s term, you won’t get any money back, and the policy ends when it expires.
- You might already have coverage through work: Some employers offer critical illness coverage as part of their benefits package, so you may not need to buy additional coverage.
In summary, critical illness cover can provide financial relief during tough times, but it may not always be necessary or affordable depending on your situation.
How Much Does Critical Illness Cost?
Some of the factors that will determine the amount you will pay for this coverage include your age, the amount of coverage you want, your health and lifestyle, your job, how much the coverage will last, and whether you smoke or not.
How To Purchase Critical Illness Insurance
To buy critical illness insurance, there are different options available for you. Below are some of these options:
Through An independent Financial Adviser:
An adviser can help you find the best policy for your needs by comparing different options. Keep in mind that you may need to pay for their advice.
Directly From An Insurance Company:
You can check out insurance companies through comparison websites. While you probably can’t buy the policy online right away, you can get a quote or find contact details for advisers who can guide you through the process. You’ll need to be assessed to see if the policy is right for you.
