There are 3 types of cover you should consider taking. You’ve probably heard about life insurance and income protection policies. But what about critical illness cover? If you hear about it for the first time, don’t worry – this guide compiles everything you need to know. Keep on reading to learn more about critical illness cover.
What is it?
Critical illness cover is a type of insurance that pays out if you’re diagnosed with one of the critical illnesses or conditions listed in your policy. The insurer is contracted to pay a tax-free lump sum, which can help you significantly, especially if the diagnosis is unexpected.
How does it work?
On buying your policy, you’ll agree to pay a monthly amount, known as the premium. In return, you’ll receive the lump sum (known as the benefit), which is paid out when you’re diagnosed with an illness or condition listed in your policy.
How much does it cost?
Several factors contribute to your monthly payment rate. Contributing lifestyle factors include your age, your health (along with your weight and family health history), your occupation (some jobs carry a higher risk than others), and even smoking status. Contributing policy factors are around the policy itself. They include: the amount of cover you decide to take out, the length of the policy (also known as the term), whether you add a child, and how many critical illnesses the policy is supposed to cover.
Is it worth it?
Many people answer with certainty – it’s definitely worth it. It’s difficult to predict if you end up needing critical illness cover. However, you’ll appreciate you took it out if the worst happens. Critical illness cover can make all the difference in decreasing the negative impact resulting from your diagnosis. Having that additional lump sum every month can help you keep up with your financial commitments, especially if you’ll be unable to work, or you’ll need to pay for your medical treatment. Maybe, as a result of your diagnosis, you’ll end up needing to make some household alterations. Whatever the case, critical illness cover is a safety net for you, and the peace of mind it provides is something to take into account.
Who needs it?
Welfare and social security benefits may not be enough to replace your income if you are unable to work due to your diagnosis. You should consider getting a critical illness cover if you don’t have enough savings, or you can’t rely on benefits provided by the state or your workplace. What’s more, you may think about getting it if you have financial dependents. These are the people whose welfare relies on your income – partners, spouses, children, or other family members. Having a guaranteed monthly lump sum can help you maintain stable lifestyle conditions both for you and your loved ones.
What illnesses does it cover?
Each critical illness insurance covers a specific list of illnesses and conditions. However, a typical policy will most likely cover 4 primary human health conditions, which are: cancer, stroke, heart attack, and coronary bypass surgery. Organ failure, loss of limbs, multiple sclerosis, or Alzheimer’s disease are among other common conditions covered by the policy. Overall, typical critical illness insurance covers 40-60 severe illnesses and around 30-50 less severe illnesses. Additionally, in some cases, it covers up to 10 child-specific illnesses. Remember to carefully read all documents to check what does your policy cover. You won’t be eligible to make a claim if you’re diagnosed with a condition that isn’t listed in your policy.
Standalone or combined?
If you’re interested in life insurance and critical illness cover, you can take out these two policies separately. Standalone critical illness policy pays out only on the diagnosis of a listed illness. It won’t pay out on your death or if you get diagnosed with a terminal illness (you’ll have 12 or fewer months to live). Alternatively, you can combine critical illness with life insurance, which will pay out on critical illness diagnosis and death. Sometimes, however, combining these two types of insurance can be more convenient, and can even come with more benefits as well.
In view of the above, you should consider taking out critical illness cover if you feel like you have valid reasons to protect yourself this way. Take your time to compare the policies and carefully read all the documents. And remember: having that safety net and securing your financial situation is a reasonable step you’ll be thankful for taking when you end up needing it.
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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