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What's Classed As Critical Illness on Life Insurance?

27th December 2019

Critical illness cover varies from policy to policy, but generally includes heart attacks, strokes, and certain types of cancer, as well as physical disability following a serious accident. As with any insurance product, however, the devil is in the details – always check the terms and definitions contained in the particular policy pack. Here are some other factors to take into account when considering buying critical illness cover. 

 

Is Critical Illness Cover Worth It? 

This type of cover is generally offered as an add-on to life insurance policies and is paid out when someone falls seriously ill or injured. It’s particularly valuable for families with a principal breadwinner – it can help them meet their financial obligations in the event that their main income stops. 

It’s also worth noting that while critical illness cover can be a lifeline to some families, certain aspects might already be covered under a standard life insurance policy. Many life insurance policies, for example, cover terminal illness – meaning that they’ll pay out a lump sum when a terminal illness is diagnosed. Again, if you currently have a life insurance policy, check or consult with your provider to establish what exactly it does cover. 

 

Are there different types of critical illness cover? 

There are two different types of critical illness insurance, additional cover, and combined cover. The key difference between the two is the number of times they can pay out. Additional cover policies are more extensive – they pay out when you are diagnosed with a serious health condition and in the event of death. Combined cover policies on the other hand only pay out at either diagnosis or death, not both. 

 

How expensive are critical illness policies? 

This depends on the individual policy. Your premium will be influenced by the amount of cover you opt for and how extensive the policy is. In determining how much cover you need, you should assess your outgoings and calculate an amount that would secure your family’s comfort for a decent amount of time. As this insurance concerns your health, providers will also want proof of any pre-existing medical conditions and might want to assess what shape you’re currently in – some even provide perks to make sure you look after yourself! 

 

How long do policies last? 

Again, this is dependent on your individual situation. Critical illness policies are usually added to life insurance, so run concurrently. Many people choose to have life insurance policies until they pay off their mortgages or their kids have flown the nest – basically until their financial commitments are significantly reduced. 

 

How likely are payouts? 

The latest statistics from the Association of British Insurance show that during 2018, 91.6% of all critical illness claims were paid out, with an average value of £70,926. This compares favorably to similar protection insurance products such as Total Permanent Disability and Income Protection, which saw payout rates of 70.2% and 88.1%, respectively. 

Critical illness insurance covers various serious health conditions, all of which will be explicitly defined in your particular policy. This type of cover can be a lifeline for families in times of crisis, helping them to meet financial obligations whilst the main breadwinner is not able to work. As with any insurance, it’s important that you look into the details of the policy itself, and assess whether the monthly or yearly premiums are a reasonable cost for the risk you’re safeguarding against. 

 

At IMC, our expert financial advisors can help you to manage, grow, and protect your finances. Whether you need advice on pension planning, investments, mortgages, or life insurance, get in contact with us and see how we can help. 

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