What is Critical Illness Cover and How Does It Work?
Confused about critical illness cover? Here’s what it is, how it works and why you may need it even if you have life insurance.
While no one wants to think about the worst happening, being diagnosed with a serious illness can impact your finances as well as your health. After all, you have bills to pay, a mortgage payment to meet and daily expenses that you can’t go without. To help ease some of this financial worry, you could take out an insurance – called critical illness cover. To help you decide if this coverage is right for you, let’s go through it together.
What is critical illness cover?
Critical illness cover will provide you with a tax-free lump sum in the event that you’re diagnosed with a serious illness covered under your policy. You could use the lump sum to meet your monthly repayments or pay off your mortgage completely, depending on the amount you receive.
When you’re unwell, the last thing you want to think about finances. In addition to handling your health, you may be focused on supporting your family, keeping them upbeat or trying to prepare them for the future. Critical illness cover can step in at this time to alleviate some financial pressure. It can be used to boost your family’s income while you’re ill and allow you to plan for the future. In such a turbulent time, critical illness insurance can be a lifeline to help you focus on the things that matter.
What is classed as a critical illness?
Keep in mind that every insurer will have their own list of critical illnesses that they cover. This may vary from policy to policy, so talk it through with your protection advisor. There will also be conditions and exclusions that apply. Although it’s not the most thrilling read, reading the fine print on paperwork is vital!
Many polices cover the following:
Cancer – excluding less advanced cases
Stroke of a specified severity
Benign brain tumour that results in permanent symptoms
Alzheimer’s Disease before the age of 65 that results in permanent symptoms
Coronary artery by-pass grafts
Kidney failure
Heart attacks
Parkinson’s disease
Heart valve replacement or repair
Multiple sclerosis
Blindness – permanent and irreversible
Deafness – permanent and irreversible
Important information
For insurance business we offer products from a choice of insurers.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is £299.
How much critical illness cover do I need?
While there’s no ‘right’ answer here, there are a few steps you can take to help you understand how much critical illness insurance you should get. Firstly, consider how you would support your family or pay the bills if something were to happen to you.
Get some rough figures together:
Your regular monthly income, including any benefits, dividends or other assets you may have
Your current monthly outgoings, from the essentials to the nice-to-haves
Any and all current debt you owe
Potential future changes to your monthly outgoings (e.g. your mortgage being paid off, helping your children with university fees)
How much you have in savings that you could use to cover any shortfall
To help crunch the numbers, you can seek expert advice from the Purplebricks Mortgage advisors. They’ll help you decide how much coverage you need to protect your finances.
How much is critical illness insurance?
This will vary from one person to the next, and there are some key considerations that will impact your premiums:
Your age: The older you are when you take out a critical illness policy, the higher your insurance premiums are likely to be.
Your job: Naturally, riskier occupations are more likely to have a higher premium.
Your health and lifestyle: If you smoke or drink or have a family medical history of illnesses, you may face higher costs for this insurance.
How do you apply for critical illness coverage?
Applying for critical illness cover couldn’t be easier today. What’s more, there are plenty of policy options on the market, so you can be sure to find coverage that suits your needs and budget. Here’s how to start:
Narrow down why you want coverage
In our experience, people rarely take out critical illness cover on a whim. They have a reason for buying it. Whether you want financial protection for your family, additional security to allow you to plan for the future, or a safety net for your finances if you fall ill, it’s worth working out why you want coverage. Then, your protection advisor can make sure your priorities are at the top of their list too.
Work with a protection advisor
While you can find a policy yourself, our protection advisors work hard to make sure you’re suited to a policy that’s in line with your needs and future goals, all at the right price. An advisor will scour the market on your behalf, advise on smart financial moves and walk you through what your policy covers – from the big headlines to the finer details. When buying such important coverage, it’s worth getting it right the first time.
In summary
Critical illness coverage offers a plan that protects you financially, should you become critically ill.
The cost of this coverage may depend on your gender, age, job and medical history.
As you get older, this coverage is well worth taking out.
Secure your critical illness coverage
When you need to double-down on protecting your family and considering your own health, insurance can give you room to do this. At Purplebricks Mortgages, we offer critical illness cover alongside life insurance and other protective policies. For protection that suits your lifestyle and budget, get in touch an experienced protection advisor. They’ll do the heavy lifting, from searching through various policies, levels of cover, different rates, and will find you the right critical illness insurance that’s right for you. Contact us today to get started.
