Most of us would want to ensure that provisions are made for ourselves and our family, should the worst happen. Life insurance is a well-known product and you might see ‘critical illness’ tagged on as an addition to a policy; but what exactly does it mean?
Critical illness is separate to life insurance and would support you and your family in a situation where you were to become seriously ill or have a severe accident. Chris Tudor, our Senior Mortgage and Protection Specialist is an expert in critical illness cover and stresses the importance of having the cover in place. He says: “Critical illness cover shouldn’t be age-based, and it’s important for people of all ages and circumstances. Many clients come to us with the misconception that you need to have a family and a mortgage to make critical illness cover a worthwhile investment, but that is absolutely not the case.
“To put this into perspective, if an 18-year-old who had car finance became seriously ill or had an accident, meaning that they were no longer able to work and pay the loan, their credit would be seriously impacted in the long term. A critical illness policy could cover that for them.”
High risk job, higher stakes
Critical illness cover is especially important for those who work in more risky, manual jobs where they are at increased risk of having an accident. For example, if a manual worker – a factory-based engineer, for instance – had an accident that resulted in them losing a limb and ultimately no longer being able to work, a critical illness policy would be incredibly important to ensure that they would be provided for, for the rest of their working life.
Whilst most companies provide death in service benefit and sick pay as part of their package, there is rarely a ‘middle ground’ that would support you if you were out of work for several years. Sick pay is often only applicable for a period of 6 -12 months, but a severe accident could result in you being out of work for a much longer period.
Equally, it is important to note that some group schemes provided by employers do not cover all eventualities and you could find yourself without the cover you need. We have seen numerous examples of individuals expecting to be covered by their employer’s policy but later discovering that the policy leaves out a number of common illnesses. Put simply, critical illness cover allows you to have complete confidence that you are protecting yourself and your future.
Cash lump sum vs monthly payout
A critical illness policy provides a cash lump sum rather than a monthly payout. A cash lump sum can be incredibly useful if you need to pay for treatment or immediate care following an accident or diagnosis. Similarly, this cash can also be used to pay for required house modifications following an accident, the installation of a stair lift, for example.
In more recent years, critical illness policies have evolved and can now cater for very specific needs and family situations. For example, if you were to be diagnosed with stage 1 cancer, your policy would pay out a percentage of the overall total, with the view that you would ultimately make a recovery and be able to return to work at a later date. The policies can also cover other family members, such as young children.
Here at Tudor, we can work with brokers directly to obtain additional bolt-ons to your policy that wouldn’t otherwise be available on comparison websites. For example, if you work in a job that regularly puts you in danger, such as a firefighter, we can ensure this is underwritten in the policy and the necessary provisions are made.
In summary, a critical illness policy is not simply about mortgage cover but rather covering the additional funds required for things such as house modifications, treatments, care and medication. If you’re reading this and thinking that a critical illness policy is something you need to get in place as soon as possible, book a call with our team and we’d be delighted to help find the best cover for you.