Income protection or critical illness cover?
Never heard of income protection or critical illness cover? Well, you’ve come to the right place.
At Caspian, not only can we find the best life insurance policy for your needs but we also try to help you understand what life insurance is along the way because after all, life insurance can feel confusing at times, right?
Firstly, (just so you know) you don’t have to choose between the two policies, as you can actually have more than one life insurance policy in place at once! In fact - a lot of the time, we do recommend more than one type of life insurance per person as everyone’s needs and circumstances are different and what may work for one person, won’t work for another.
Critical illness cover - what is it?
Critical illness cover, in short, is what it says on the tin. But more specifically, a critical illness policy ensures that if you were to be diagnosed with a critical illness specified within your policy conditions and make a valid claim, you’d receive your lump sum pay out.
The illnesses you are covered for vary with each different provider and below are some examples of what could be covered:
- Heart attack
- Stoke
- Cancer
- Organ failure
- Multiple sclerosis
- Loss of limbs
Having critical illness cover in place means that if times get tough, the pay-out this policy provides could ensure you would have one less thing to worry about and you can focus on your recovery. 
How can critical illness benefit you?
Firstly, one of the top benefits of having a critical illness policy in place is the peace of mind it can give you. Being diagnosed with a critical illness is a curveball for anyone - you never think it will happen to you. But life is unpredictable and the pay-out from a critical illness policy can help ensure that you and your loved ones would not struggle financially and can help with:
- Travel costs, if specialist hospitals are further away
- Replacing lost income
- Modifications to your home as a result of your diagnosis
- Costs for any carers
- A nest egg to leave for your loved ones
- Medical bills
- Your bucket list
The protection specialists at Caspian typically recommend that your critical illness policy covers you up until retirement age, meaning that you would be protected throughout the entirety of your working life.
What is income protection?
If you haven’t heard about income protection yet, let’s get you clued up!
This type of policy is different from a level life insurance policy (the standard life insurance policy) in so many ways! The main reason being that this type of policy does not pay out one large lump sum. However, in the event of a valid claim, income protection can pay out a selected percentage of your income each month.
Income protection is there to financially protect you, by replacing part of your income if you were unable to work due to illness or injury. This is a type of long term financial protection, and typically covers you up until retirement age, financially protecting you throughout the entirety of your working life. This cover is designed to help you afford the essentials whilst you are out of work. For example, this policy could help you pay for:
- Monthly bills
- Mortgage/rent payments
- Childcare costs
- Food shops
Benefits of income protection
One of the many benefits of this policy is that unlike other types of life insurance, once your income protection policy has initially paid out, your policy can pay out again in the future. Additionally, if you have made a claim once and get ill again, typically within a year, some providers may be willing to waive the deferral period meaning that your payments can start again. Plus, once an initial claim has been approved, if you return to work on reduced hours, providers may offer to continue your payments on a reduced amount, until you are able to fully return to your normal working hours.
Income protection is progressive in the sense that, unlike other types of life insurance and subject to underwriting, this policy can cover mental illness. Meaning, if you were to be diagnosed with a mental illness and were unable to work due as a result, then you would likely be able to claim on your policy after you have been signed off by your GP.
Another benefit of income protection is the policy could pay out until you can continue working again, retire, your policy ends or pass away - whichever comes first. This ensures that whilst you are unable to work, you can focus your time and energy on getting better and not about how the bills are going to be paid. 
How to know which is best for you?
When deciding between these two types of cover, it’s important to ask yourself whether or not, if the worst happened, you would need small monthly payments or one larger payment? If the answer is both and it fits within your affordability then having both policies running alongside each other would be the ideal option.
However, if you have 100% ruled out the option of choosing both policies and you have no idea which policy is best suited to your circumstances, then your first step should always be seeking free specialist advice. At Caspian, our protection specialists assess your circumstances, affordability, and preferences, and search through the UK’s leading providers to find the best policy for you for free. There’s no catch, just straightforward tailored advice from friendly UK specialists - start your free quote today!
