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What is Life Insurance with Critical Illness Cover?


1st Jan 2015 Insurance & Legal

What is Life Insurance with Critical Illness Cover?

A life insurance policy is a great way to guarantee your family has income to support them after you’ve passed away. Today, more people are also opting for a critical-illness cover together with life insurance. But is it suitable for you?

The Difference between Life Insurance and Critical-Illness Cover

Life insurance is typically taken out so you can leave some money behind for your family when you die. This is usually so any outstanding debts can be paid off, in addition to a lump sum. Your family can receive the payout in various ways, and life insurance calculators are great for ensuring you leave behind an adequate sum.

However, a life-insurance policy doesn’t provide you any support during your lifetime; for example, in case you are injured. Critical-illness cover is designed specifically for these situations. If you fall sick or are injured, the critical-illness cover will provide you money to deal with the changing situation. Life insurance with critical-illness cover is an alternative to having a standalone health-insurance policy.

Life-insurance policies can typically provide your family with a lump sum or fixed payments for the next few years after your passing, but critical-illness cover is only a lump-sum payment. It isn’t going to provide you with a steady income, but will give you a tax-free sum to spend the way you wish after an injury or illness.

What Does Critical-Illness Cover Entail?

The specific conditions covered by critical-illness cover depend on your insurance provider. Generally, the cover includes some or all of the following conditions:

  • Stroke
  • Heart attack
  • Some cancers
  • Conditions such as multiple sclerosis

Your critical-illness cover typically won’t include any pre-existing conditions and certain chronic conditions might be excluded. You also need to note that in case of some cancers, the specific diagnosis you have can affect your ability to claim. On the other hand, sudden dramatic injuries can often be included in the cover. It is essential to discuss the conditions that your policy covers with the insurer before you sign the contract.

Why Should You Consider Critical-Illness Cover?

As we live to older ages, it is much more likely that within a specific timescale you’ll develop a critical illness before you die. Therefore, critical-illness cover for life insurance could be beneficial for you.

If you become critically ill, you might find it difficult to keep up with mortgage payments and critical-illness cover is designed to help in situations like these. Although you will most likely receive support from the state, the help you receive might not be as adequate as you might think. Therefore, critical-illness cover could be useful to pay medical bills or help you with home modifications.

The Money Advice Service also recommends you consider your specific situation carefully. Do you have enough savings to cover your cost of living if you aren’t able to work for a while? If the answer is yes, then critical-illness cover might not be needed in your case. If you feel like you couldn’t keep up with payments, if you suddenly got ill or injured, then it might be a good idea to discuss critical illness life insurance with your insurance provider.

Consider Your Options

It is a good idea to look for whole life insurance quotes online and see what is on offer. Critical-illness cover might be a good idea to include in your life insurance policy, but you should discuss your situation first with an independent financial adviser or anyone with experience of life insurance.

In some instances, policies such as income protection insurance may prove more useful for your situation. Look through different options and ask advice from a financial adviser. Also, make sure you discuss the policy in detail with your insurance provider to ensure you understand what it entails. 

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