Would you rather a lump sum or monthly payments until retirement?
Unfamiliar with policies like income protection and critical illness cover? Well, you're in the right spot!
And here's a heads-up before we kick off - you don’t have to pick just one of the two policies. Surprise, surprise, you can have multiple life insurance policies running side by side!
In fact, a lot of the time, we actually recommend more than one type of life insurance policy if it fits your circumstances. After all, everyone is different, and what fits like a glove for one person might not be the best fit for another.
What is critical illness cover?
It’s one of the most important types of life insurance you can get.
Critical illness cover offers a tax-free lump sum payment if you were to be diagnosed with one of the specific medical conditions listed in your policy.
What does critical illness insurance cover?
The illnesses covered by a critical illness policy will always vary depending on your provider and your unique medical history. But the main illnesses covered by a critical illness policy are:
- Cancer
- Loss of sight
- Organ failure
- Heart attack
- Multiple sclerosis
- Loss of limbs
- Parkinson’s disease
- Stroke
- Alzheimer’s disease
Who needs a critical illness policy?
Anyone can benefit from life insurance. But some people could benefit from it more than others. Some examples of those who could benefit most from having critical illness cover in place are:
- Parents (primarily single parents)
- Anyone with little to no savings
- Those who are self-employed
- Anyone who has someone that is financially dependent on them
Income protection vs. critical illness cover
Both income protection and critical illness cover serve different purposes and offer distinct benefits.
Income protection can be seen as a reliable safety net, delivering regular payments and ensuring financial stability over time. Whether it's managing daily expenses, paying bills, or funding your children's education, this policy provides financial security, particularly if you're the primary breadwinner.
Critical illness cover provides a cash lump sum that can be invaluable in the face of severe medical conditions. This lump sum could be instrumental in managing costly treatment, modifying your home, or even taking a recuperative holiday.
Breaking down income protection
Income protection insurance is designed to provide you with a regular income if you're unable to work due to illness or injury. Typically, it pays out until retirement, death, or your return to work.
This type of life insurance can replace a significant portion of your earnings, typically up to 60% of your monthly income. This cover is there so that you can maintain your standard of living even when sidelined by health issues. An income protection policy can give you peace of mind if you get ill or injured.
What are the benefits of income protection?
Also known as sick pay insurance, income protection insurance is one of the best life insurance policies you can have in place. This cover is designed to help you afford the essentials while out of work. For example, this policy could help you pay for the following:
- Monthly bills
- Mortgage/rent payments
- Childcare costs
- Food shops
What can you use your policy to pay for?
If you ever had to claim on your income protection policy, the monthly payout could make a massive difference to your life. Here are some of the top things you could use the money from your income protection policy to help pay for:
- The weekly food shop
- Your bills
- The rent or mortgage
- Any loans that you pay off monthly
- Vets bills
- Childcare costs
It all boils down to one thing
One of the main ways to know which of these two popular policies is suitable for you is simply the way they pay-out.
The last thing anyone wants is for you to become seriously ill at all. But by having either of these policies in place, you’ll have peace of mind that if you became ill, you’d have some money fall back on, whether this is in the form of a one lump sum payout, or regular monthly payments.
What’s your biggest worry?
Choosing between income protection and critical illness cover is a complex task, and the 'correct' choice often lies in your individual circumstances.
If your biggest worry is losing out on your income if you are unable to work due to sickness or injury, then income protection might be the answer. Notably if your employer offers limited sick pay, this policy could be a lifeline.
However, if you're worried about the financial ramifications of being diagnosed with a severe illness, critical illness cover can provide you with much-needed peace of mind. This can be particularly beneficial if you have a family history of specific medical conditions.
The solution
Although it might sound cliche, there really is no one-size-fits-all solution in life insurance – it's all about what suits your unique circumstances.
Seeking advice from the life insurance experts at Caspian Insurance is key, if you want to find the cover that best suits you. Our team will always consider your needs, affordability, and circumstances.
We don’t just look at the cost of your cover. We also assess what level of cover you need and how the pay-out, and provider could benefit your family.
Five ways you could use the payout from your critical illness policy
There are so many ways you could use the money from your policy, after all the money is yours to do what you want with. Here are just five ways you could use the payout:
1. The essentials - The little things aren’t free, and your critical illness policy could help you pay the mundane, every day bits, that you usually wouldn’t give a second thought to.
2. Your dream getaway - Who said your tax-free lump sum needs to be used for boring things? Being diagnosed with a serious illness, especially when it comes out of nowhere, can be a shock to say the least. So using the money to make memories is definitely an option worth considering.
3. Changes to your lifestyle - As we’re sure you can imagine, being diagnosed with any illness is never going to be plain sailing, and changes to your lifestyle will need to be made. Whether this is modifications to your home, travel to and from hospitals, affording additional medication - the list goes on.
4. Money to put aside - The money is yours to do what you want with, and if you wanted to put the majority of your lump sum to one side so leave to your family, then it’s totally up to you.
5. Help with your mortgage - It’s one of the biggest debts you can have in your life, so it makes sense that you’d want to use the payout to pay off a chunk of your mortgage. This could give both you and your family one less thing to worry about.
Why we’re here
Researching which type of life insurance policy is right for you is a task in itself.
Which is why we’re here. We take the lion’s share of the work off of your shoulders, taking the guesswork out of life insurance for you.
By learning more about your circumstances and needs, we can search the market to find the policy that’s right for you, at the right price. Let the team at Caspian Insurance help you sort your life insurance today, for a worry-free tomorrow.
