Critical illness insurance FAQs
Critical illness cover pays out a tax-free lump sum if the policyholder is diagnosed with one of the critical illnesses listed in the insurance policy. Whereas standard life insurance offers financial protection for your family in the event of your death, critical illness insurance offers financial protection if you're diagnosed with a serious illness – which could be crucial if you have to give up work because of poor health.
Which illnesses are classed as "critical"?
Most policies cover illnesses such as cancer, strokes, major organ transplant, Alzheimer’s disease, and heart attacks, but the list will vary from one policy to the next, so you need to find out these details before you purchase your cover.
Do I need critical illness insurance?
If you are the sole owner of a home with a mortgage you may want to buy a policy to make sure you can pay your mortgage if you become seriously ill. Equally, if you are the main provider and have children you may want to make sure your family are provided for if you can no longer work due to poor health. If you do have children, some policies also offer cover if your son or daughter becomes ill.
In all cases, the payment from critical illness cover could be very handy if you need to adapt your property or move house because of your illness.
Is critical illness cover expensive?
Critical Illness cover offers financial protection if you become terminally ill or are diagnosed with a critical illness, but usually people take out combined critical illness and life insurance, which also pays out in the event of your death – so it offers more than standard life insurance. As a result, premiums tend to be more expensive because there's a greater likelihood of you making a claim.
More and more people now survive serious illnesses such as cancer or heart attacks, but often need to take time off work or seek private medical treatment, and this is where critical illness cover comes into play.
What do I need to consider when I buy critical illness cover?
When you decide to research critical illness cover options, there are several factors to consider, including:
- How much the policy will pay out: you can choose the amount that will be paid tax-free, and premiums will be higher if you choose a higher payout amount.
- Length of cover:you choose how long a policy lasts, whether it's for life or just until the mortgage has been paid off.
- Illnesses covered: Each insurance providers pays out only on illnesses named in their policy, so you need to assess which policy you feel most comfortable with.
Does my medical history count?
When you take out a critical illness policy, you will be asked a number of key questions about your health and medical history. It's important that you are honest, because your claim could be invalidated if your insurer discovers medical facts that you didn't declare when you took out the policy. The majority of policies also have an exclusion period at the beginning of the policy during which you cannot claim, and this usually lasts for three months.