Critical Illness Cover

Falling critically ill is something that nobody would want to think about, but in a world where the risks people take are exposing them to more and more life threatening illnesses, getting critical illness cover is becoming more regularly advised than ever before. Critical illness cover doesn’t cover every life threatening disease that’s out there, most commonly, you will be covered if you have a stroke, heart attack or non-terminal cancer.

Current Cancer Research UK statistics state that 1 in 2 people will be diagnosed with cancer during their lifetime. In the UK there are over 200,000 hospital visits each year due to heart attacks: that’s 1 every 3 minutes.

It’s these statistics that highlight the importance of critical illness cover.

What is The Purpose of Critical Illness Cover?

Critical illness cover will pay out a tax-free cash lump sum if you are diagnosed with a specific critical illness. It is not uncommon for it to be included as part of your life insurance policy as the two generally go hand in hand.

The critical illness payout is designed to help you and your family cope financially if you are diagnosed with critical illness and consequently, will not be able to work and bring in a steady income.

The payout can be used for whatever you need it for, perhaps you want to keep up with the mortgage payments, or you have children that depend on you financially or, you want to go on the family holiday of a lifetime – whatever you decide, a critical illness payout can help you and your family to continue to live a normal life.

It should be noted that critical illness cover is different to terminal illness cover, therefore if any illness is deemed terminal, you probably won’t be covered by a standard critical illness policy. A critical illness policy is likely to only cover serious illness or injury and will only pay out if the condition isn’t deemed terminal.

As is the case with many insurance policies, the exact terms of your cover will be personal to you and dependant on the insurer you take the policy out with.

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Terms and Conditions of Critical Illness Cover

It’s always best to check your exact terms and conditions with your specific insurer, however, some of the general ones include:

  • You will only get one critical illness payout and then the cover will be terminated
  • Critical illness cover does not payout of you die, this is the role of life insurance
  • The premiums should be tax-free and would need to be included on your P11D form.

Who Can Take Out Critical Illness Cover?

Generally speaking, UK residents above the age of 18 with a UK bank account can take out critical illness cover. It is most popular among people with a family, whom they need to support financially. When you are applying for critical illness cover, insurers will assess your health to determine your level of cover. Factors such as age, smoking and a general unhealthy lifestyle will heavily influence the cost of your critical illness cover, because the likes of smoking, drinking and poor diet make you more exposed to critical illnesses, such as heart attacks and certain types cancer.

Those people who are offered sick pay as part of their employee benefits should not totally write-off critical illness cover. Even though you get sick pay, it may not cover you for the entire length of your illness. In this event, critical illness cover can be put in place after your sick pay has ended to give you a steady income for as long as you need it.

Your home/property may be repossessed if you don’t keep up repayments on a mortgage or any other debt secured on it.

Maple Leaf Financial Services is a credit broker not a lender.

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