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Critical illness cover could be a financial life saver

Critical illness cover provides a lump sum following the diagnosis of a serious illness. This payment can be vital in getting through a tough time. When you’ve been diagnosed with a serious illness such as heart disease or cancer, it is likely that you’ll be spending a lot of time out of work. That’s where critical illness can be a financial life saver, giving you more time to concentrate on your health. The policy can be a standalone policy or it can be added to your life insurance policy.

How does the policy work?

Policyholders of a critical illness plan pay a monthly premium in order to receive a lump sum when diagnosed with an illness. In the event that you suffer from a serious illness that meets their specified list such as a stroke, cancer or heart attack then you can make a claim with your provider. The policy then pays out, so you can cover any expenses whilst you’re recovering.

The need for critical illness cover

Cancer and heart disease are one of the biggest killers in the UK at the moment. This combined with huge waiting periods for the NHS and the need for specialist treatment could mean that you are out of work for a long period of time. Not only that, but it can help give you peace of mind; you won’t have to worry about your finances and can concentrate on getting the treatment you need.

Replace lost income

Not all employers have a generous sick pay scheme and often statutory sick pay won’t be enough to cover the bills and the mortgage. If you have children or dependants relying on your income, it can affect their livelihood too. A policy can help to provide an income whilst you’re recovering from an illness. It can help to pay the rent or mortgage and bills and help maintain the current standard of living.

Expenses not covered by health insurance

Even if you were to have a great health insurance plan you may still need additional funds. Specialist treatment isn’t always in your location, so you could spend extra money on travelling to hospitals and getting hotels. Furthermore, if you have children you may need to pay for extra childcare whilst you’re recovering or in the hospital.

Debt and mortgage protection

Even if you are diagnosed with a serious illness, you will still be required to pay off your mortgage and any debts at the same rate as agreed with the lender. You are more likely to suffer from a critical illness whilst still paying off your mortgage than you would be to pass away. Having a guarantee that mortgage and debts payments are met for a couple of years when you’ve been diagnosed with cancer can really help to take a worry off your mind.

mortgage protection

Prevent further debt

If you don’t have significant savings to dip into or a partner that could cover your income whilst you recover, it could lead to further debt. If you have to turn to credit cards or overdrafts to finance your bills, it can add a further strain to an already difficult situation. A critical illness policy could help to prevent going into debt and avoid money worries.

Things to look for when obtaining critical illness cover:

Critical illness cover is relatively straightforward to set up and doesn’t often require medical underwriting unless there is a previous condition, or you are getting a substantial amount of cover. There are a few things you should be aware of when setting up your policy.

  • Medical conditions that are covered

Each provider must adhere to the ABI’s minimum definitions guide which states that the three core conditions – heart attack, stroke and cancer – must be covered by the policy. They then list a further 19 minimum definitions for other conditions that are typically included in the policy. Normally insurance providers will have around 40 to 50 illnesses on a policy. This could vary after they’ve covered the core conditions depending on the provider.

  • When you are paid on a claim can differ

 Some insurance providers will pay out on a claim immediately after a diagnosis. However, some state a waiting period must be met before they will pay out for the condition. This is what insurance providers refer to as a deferred period. This differs between providers but could be anything from 7 days up to 13 weeks.

  • The cheapest policy isn’t always the best

With life insurance, if you find a cheaper policy for the same amount of payout it doesn’t make much of a difference. However, with critical illness cover, the cheapest doesn’t always mean the best. This is due to the fact that insurance providers cover different illnesses at different severity levels. It may be worth looking for a combination of how much the premium is and how comprehensive the cover is.

  • Make sure you cover your costs

When you face a critical illness, you could be out of action for a long period of time. Recovery times will change too depending on your condition, current health status and age. The main thing to remember is that your costs are covered for as long as you think you’ll need them. This is to prevent you getting in financial difficulty. Consider your costs over a period of time when choosing the coverage amount.

  • Look out for added benefits

Some providers offer free or discounted prices to add your children onto your policy. Whereas some insurance providers can help you get access to specialist medical advice. Counselling may also be included to help with the recovery of an illness too. These benefits vary by provider, but it’s worth looking out for them to get the most out of your critical illness policy.

For more information on your critical illness cover, get in touch today.

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