Critical illness FAQ's
Life is unpredictable. We all know that. But what if there was a way we could financially protect ourselves against the curveballs life throws at us… That’s where critical illness cover comes into play.
The scary statistics sadly appear to be getting worse by the day so critical illness cover is one of the most relevant types of life insurance you can get in 2022 but surprisingly, many people still have not heard of it.
In this blog post, we are going to answer some of your most frequently asked questions surrounding critical illness cover!
What is critical illness cover?
Critical illness cover provides a one off, tax-free, lump sum payment if you were to be diagnosed with a critical illness from a specified list of definitions. This cash injection ensures that you would not struggle with regular payments, modifications you may have to make to your home and any additional treatments you may require as a result of your diagnosis.
What is children’s critical illness cover?
Most of the UK’s leading life insurance providers now offer additional critical illness cover for your children at no extra cost when you take out a critical illness policy with them!
In 2022, major providers such as AIG and Royal London have made improvements to their children’s critical illness cover, ensuring that it includes a wider range of illnesses and definitions. These changes have been introduced in order to ensure their children’s cover is more comprehensive, meaning that as a customer, you are always receiving the most out of your policy!
Do I need critical illness cover?
The frightening truth is, no one knows what is around the corner and the only thing we can do is be prepared. This type of life insurance policy provides a cash injection during a difficult time. This policy could provide financial security and peace of mind when yourself and your loved ones are going through a tough time.
One of the great things about critical illness cover is that this policy is ideal for both someone with or without dependents. When you have loved ones relying on you, not only for financial support but also emotional support, being diagnosed with a critical illness can drastically change the structure of your life and can unfortunately impact you financially. A critical illness policy negates this risk by providing a one off lump sum if you were to be diagnosed with a critical illness! For those who are without dependants, the lump sum that this policy provides would ensure not only can you afford the essentials you need to get by but you will have peace of mind at a difficult time.
Does critical illness cover death?
This type of cover, when chosen as a standalone policy, does not cover you in the event of death. However, when combined with a level life insurance policy, known as ‘Life & Critical Illness Cover’, this policy would pay out if you were to pass away or claim on a defined critical illness, whichever were to come first.
How much critical illness cover do I need?
The amount of critical illness cover you need can be concluded by yourself with guesswork or with the help of a qualified protection specialist. They will take into account your current circumstances, your priorities, your affordability and your health and lifestyle in order to create a tailored life insurance policy to benefit you and your loved ones.
What is defined as a critical illness?
Each provider has a slightly different variation of what they cover under their critical illness policies but the main illnesses that are covered as standard by most providers include:
- Heart attack
- Cancer
- Stroke
However, most providers cover a more extensive range of long term health conditions and definitions on their critical illness policies. Additionally, some of the UK’s leading providers regularly revise their critical illness definitions in order to be more inclusive and ensure that their customers are covered for a more extensive range of illnesses.
Is the pay-out from a critical illness policy taxable?
NO!
The lump sum you will receive from your critical illness policy is not tax deductible, providing you pay the monthly premiums yourself. Thus, whatever your agreed lump sum is, you will receive the full amount if you were to be diagnosed with a critical illness from the defined list of illnesses detailed within your policy schedule.
Can you get different types of critical illness cover?
Critical illness cover comes in all shapes and sizes with several providers now offering enhanced versions of the product.
Legal and General’s enhanced version, named critical illness cover extra, provides 48 full payment conditions that pay out 100% of your lump sum if you were to make a claim on one of these conditions. This policy also provides an additional 28 payment conditions of up to 50% of your lump sum or £30,000 (whichever is higher). Their enhanced version of the cover also offers enhanced children’s critical illness cover which covers an unlimited amount of children.
If an enhanced version of critical illness cover is currently within your budget, it is absolutely worth it!
What is the difference between critical illness cover and income protection?
Although both of these policies offer different benefits, they do have one thing in common and that is their effectiveness as life insurance policies.
Income protection gives you a financial helping hand by providing monthly payments that equate to a chosen percentage of your income, if you were to become ill or injured and unable to work as a result. Whereas critical illness cover provides a tax-free lump sum if you were to be diagnosed with a critical illness from a defined list of illnesses.
Additionally, it is worth noting that if it falls within your budget, you are able to have both of these policies running alongside each other, as they offer a different type of financial protection. Discussing your current circumstances, lifestyle, and health with a protection specialist means that we are able to recommend the policy most suited to your current circumstances!
