Do I need critical illness cover?
Critical illness cover is a form of insurance: you pay a monthly sum to your insurer, and in return you get the peace of mind of knowing that should you fall ill, your family will be provided for. Whether the monthly expense is worth it will depend on your individual circumstances, so when deciding on whether to take out a policy, you need to consider your own financial situation and that of any dependants.
How it works
When you take out a critical illness plan, you agree to pay a premium to your lender every month. In return, they agree to pay out a lump sum if you are diagnosed with a medical condition whether you are to work or not.
Because your insurer is assessing your personal risk of illness, you may pay less if you make an effort to stay healthy by maintaining a healthy weight and taking regular exercise.
It’s important to understand the terms and conditions of your policy. Your insurance company should list the medical conditions that are included in your cover; if you’re diagnosed with an illness that isn’t on the list, you may not get a payout, even if you’re unable to work. For some illnesses, your payout may depend on the severity or progression of the condition.
Things to consider
- It’s important to be sure you can afford to make the monthly payments for the duration of your critical illness cover. If you stop paying your premiums, you policy will no longer cover you in case of illness.
- You might want to combine your cover with a life insurance policy, which would pay out a lump sum in the event of your death. If you do this, make sure you understand how your policy works; you may only be eligible for one payout, so if you claim when you get ill, your dependants would not receive anything else on your death.
- It’s vital to offer an honest and full disclosure about your health when applying for critical illness cover. The details you give will affect the policy, and if you do not disclose important medical details, any claim you make could be refused.