What is Critical Illness Cover | What is Critical Illness Insurance
Date: 15 September 2017 Author: Lewis Cable
What is Critical Illness Cover and What Does It Cover?

What is Critical Illness Cover and What Does It Cover?

critical illness insurance

Critical illness cover is a type of insurance policy covering critical and serious illnesses specified within the policy. Should you develop one of the listed illnesses, the policy will pay out a one-off, tax-free lump sum to help you pay your mortgage or rent, other debts or, should you require it, adapt your home (i.e. provide wheelchair access).

Critical Illness Cover vs. Life Insurance

Although life and critical illness insurance are often sold together, it is important not to confuse them. Life insurance policies typically cover illnesses where the policyholder is expected to die within a year of diagnosis (‘terminal illnesses’) and, of course, the policy holder’s death. Critical illness cover covers serious – critical – illnesses that may leave you unable to work for a prolonged period and do not pay out upon your death.

What is Covered?

What is covered by a critical illness policy depends on insurers and may, for example, include:

  • Heart attack
  • Stroke
  • Certain types/stages of cancer
  • Conditions like multiple sclerosis
  • Bacterial Meningitis
  • Deafness
  • Major Organ Transplants
  • Parkinson’s Disease
  • Traumatic Brain Injuries

Some policies may also make smaller payments for less severe illnesses or if a child is diagnosed with one of the conditions specified and/or include total permanent disability due to injury or illness.

What is Not Covered?

What a policy covers or not will be specified within the policy details. Some policies may, for instance, not cover certain types/stages of cancer or other conditions that are not listed within the policy. You will most likely also not be covered for health issues you were aware of before taking out the policy.  Ensuring you are fully aware of your policy’s details and what is/is not covered is therefore of utmost importance.

Spectrum FA Advisor discussing critical illness insurance with a client

Do I Need Critical Illness Cover?

According to the ABI (Association of British Insurers, ‘Welfare Reform for the 21st Century’):

One million employees become suddenly unable to work because of serious illness/injury and approximately 250,000 people (around one per cent of the workforce) leave employment due to illness every year. Around 60% of these people are the main household earners.

Without insurance as a safety net, the household income of:

  • 8 million households would fall by over 1/3 if main earners were to stop work because of illness
  • 6 million households would drop to less than half if main earners became too ill to work

Ranging between £70 and a little over £100 per week (depending on circumstances) state benefits may not be sufficient to cover your income should you become ill. You should, therefore, consider taking out critical illness cover if you do not have:

  • Adequate savings to fall back on in case of serious illness or disability
  • A suitable employee benefits package that covers long-term absence from work due to illness

We have years of experience in helping families obtain critical illness cover to suit their circumstances. To learn more about how we can help you secure your financial future, give us a call on 01279 315 013, email us: info@spectrumfa.co.uk or use our contact form today.

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