A guide to critical illness cover
You are four times more likely to suffer a serious illness than you are to die before the age of 65, yet far more people have life insurance than critical illness cover. Here, we take a look at how critical illness policies work and why cover is so important...
What is critical illness cover?
This kind of policy pays a tax-free lump sum out in the event that you become critically ill. Each policy covers a specific range of conditions but most of the more common serious illnesses, such as cancer and heart attacks, are included. In order to qualify for your payment, you will usually need to survive with the condition for one month, although this varies from policy to policy.
Who needs it?
While many people don't consider critical illness insurance until they become parents, it can be a useful protection for many different people. For example, if you have financial commitments such as a mortgage, then having this kind of protection in place can give you peace of mind that you would be able to clear these debts if you do become seriously ill.
What doesn't it do?
Not all conditions are covered by critical illness policies, so be sure to read your policy carefully so that you fully understand what is and isn't included.
These policies tend to pay out a lump sum in the event that you fall ill but if you want cover that pays out over the longer term or in the event of your death, then it may be worth considering other forms of protection as well as a critical illness policy. For example, life insurance, payment protection insurance or income protection cover all provide additional layers of protection. But if you have no dependents and just want to make sure your mortgage is cleared or you could afford any expensive treatment, then a critical illness policy could well be a worthwhile option.
Top tips for buying critical illness cover
When buying any insurance product, don't just look for the cheapest option. You need to make sure you're happy with the level of cover provided and that you're getting value for money.
If you're changing policies, never cancel anything until the new cover is in place, so that you're not left unprotected.
Make sure you give completely honest information in your application, otherwise you risk any claims being rejected.
Review your policy whenever your life situation changes, for example, if you move jobs or have children.
Keeping the cost of critical illness cover down
If premiums for critical illness seem expensive, then think about ways you can reduce the cost of cover. Remember that your lifestyle choices can dramatically affect the price of critical illness protection. For example, quitting smoking can cut your premiums considerably. Research by moneysupermarket.com shows that smokers could save more than £6,000 on life insurance and critical illness cover over 25 years, simply by ditching cigarettes.