If you are worried about becoming ill or having to give up work for medical reasons, your first thought is probably reserved for how you and your family will cope financially. If your salary is instrumental in helping your family pay the bills, you should look at some sort of insurance protection. After all, you never know what could happen.
When it comes to an illness or injury, you have two distinct types of insurance cover that could come in handy. In our latest guide, we talk you through critical illness cover and income protection insurance, offering advice on how they differ and how they could help you during a difficult time.
Not being able to work due to illness can be devastating for you and your family. If you are diagnosed with a serious illness, or need surgery, you might need to rely on cover such as critical illness.
Critical illness cover is usually sold with a life insurance policy, but you can get it on its own. It is important to note that the illness you contract has to be on the disclosed list from the insurance provider. You should ensure you are familiar with the list when you take out the policy.
Taking out critical illness cover means that you will receive a one-off lump sum, which will go straight to you. If it is written into trust, it is a tax-free payment.
This type of cover can be helpful in replacing your income if you do not have enough savings or spare money to see you through your time off work. Critical illness cover can often be a way for families to pay for medical treatment or household bills.
Income protection is one of the most claimed policies on the market. It differs to critical illness cover in the sense that income protection pays out monthly. This can be helpful in replacing some of your monthly salary; it is usually the equivalent of 55%-60% of your annual salary.
Income protection insurance is particularly helpful for the self-employed as it can provide a type of sick pay. What is more, on income protection insurance you can claim on a broader range of illnesses, including mental health issues as well as physical health problems like broken bones or back conditions.
One of the key benefits of income protection insurance is that you can claim multiple times. You may also opt for a delay between claiming and receiving payments. For instance, if you have enough money to tide you over for the time being. The longer the delay, the lower your monthly premiums could be.