Friday, 24 July 2020

What is critical illness insurance and who needs it?

Never heard of critical illness insurance? Or heard of it, but not really sure what it is and whether or not you need it? Well, first, you’re not alone – and second, this blog will help.

None of us really wants to think about the prospect of becoming critically ill. So none of us really thinks about how and why we might want to protect ourselves against the possibility of it happening to us. We’re probably not even aware of how a diagnosis could affect us and our households financially.

But the fact is: if you’ve got ongoing financial commitments (which most of us do) and/or other people who rely on you financially in some way (whether that’s a partner, children, or other family member), an unfortunate diagnosis can be financially damaging. This is exactly where critical illness insurance steps up to the plate.

So, what is critical illness cover?

Critical illness cover is an insurance policy designed to protect you against the financial consequences of an unfortunate diagnosis – e.g. being unable to work for a period of time. This kind of cover pays out a lump sum if you’re diagnosed with one of the illnesses listed in your policy – usually including things like cancer, heart attack, stroke, organ failure, loss of limbs, loss of hearing or sight, multiple sclerosis, Alzheimer’s, and Parkinson’s. You can often add children’s cover to your policy at no extra cost, which is always a good idea, because having a child who’s critically ill can also have financial implications on the household.

That’s critical illness in a nutshell, but it’s important to make sure you understand all the T&Cs that go along with having a policy like this – including what is and isn’t covered, how children’s cover pays out differently to adult’s cover, and so on. This useful guide will help you do that.

What does critical illness cover protect?

As mentioned above, a critical diagnosis can often bring with it unexpected financial consequences. This could be because you need time off work, for example, or someone else in your household needs time off to look after you. You might need to make changes to your home (e.g. making it wheelchair-friendly) as a result of your new condition. Or you might need money for travelling to and from hospital appointments, or want to pay for extra medical treatment. All of this means you might find yourself struggling financially at a time when you are least able to cope with it.

Critical illness cover protects you against that struggle. It gives you a financial cushion to be used at the time when you need it most – whether it’s to pay for the things like the above, keep up with bills and expenses, or just to give you a bit of breathing space. The money is paid out as a tax-free lump sum, so ultimately it can be used in whatever way you need it at the time.

Who needs critical illness cover?

As with any insurance, critical illness cover is there to give you peace of mind in case something unfortunate happens – in this case, a critical diagnosis. That’s why this kind of cover is recommended for anyone who thinks they’d be financially affected if it happened to them – so usually people with financial commitments or dependents (i.e. other people who rely on their income). If a critical diagnosis could affect your role as a breadwinner in your household, then you could probably do with having some cover in place. That way, you’d have peace of mind that should you fall critically ill, you’ll have a financial cushion to fall back on, and you’d be able to concentrate on getting better without worrying about money.

If you enjoy my blog, please consider following me on Bloglovin'
Blogger Template Setup by fazal