What is Critical Illness Cover?
Critical illness cover is a type of insurance policy that issues a tax-free, lump-sum payout in the unfortunate event that you fall seriously ill or injured. The tax-free payout is designed to help you and your family cope financially, as having a critical illness or injury means you will be unable to provide a sustainable source of income. Distinguishing between a critical illness and what isn’t a critical illness is one reason why critical illness cover as a whole is often overlooked. In most cases, lenders will stick to a general list, but it may not be gospel, so consulting your lender is the best bet. The general list includes illnesses such as non-terminal cancer, major organ transplants, strokes and heart attacks. Bear in mind that terminal illnesses are not included in critical illness cover, so if you are looking for this level of cover, you will need to look into terminal illness cover.
The importance of Critical Illness Cover
You cannot take critical illness cover out once you are diagnosed with a critical illness, so it’s important that you take the policy out when you are fit and well. It may seem odd planning for a critical illness, but if you do fall ill, you will be extremely thankful that you took out the cover.
Falling critically ill can exhaust your body mentally and physically, so working will be off the cards. Therefore, without your working income and when your sick pay ends, will you be able to financially support yourself and your family?
If the answer is no, then that is the exact reason why critical illness cover is important.
Who needs Critical Illness Cover?
Critical illness cover is not restricted to a certain person or demographic and in any event, taking out critical illness cover will not be something you regret.
It is particularly important if you have a family who relies on you financially, whether that’s children, a marital partner or both.
Critical illness affects not only you but the people around you, which is why their welfare should be taken into consideration when deciding the level of cover on your policy.
Do you need Critical Illness Cover if you have Life Insurance?
Quite often, critical illness cover and life insurance are confused and people are unsure if they need both. Adding to the confusion, critical illness cover can be offered as an add-on to life insurance, so it’s always best to check whether your life insurance policy includes critical illness cover.On the whole, life insurance will only pay out if you die, whereas critical illness cover only pays out when you are diagnosed with a serious illness and not when you die (even if you die from the critical illness). The two have different objectives; critical illness is designed to support you and your family financially in the event that you can’t work because you have a serious illness. Whereas life insurance issues a payout to your family in the event of your death, to aid them financially in your absence. In any event, having both policies will provide a sufficient level of cover for you and your family if anything is to happen – something that you will never regret.