Critical illness cover - what is it and why do I need it?

Critical illness cover is often overlooked and isn’t usually a person’s top priority. Looking at statistics, it certainly seems like something we should be paying more attention to, with odds like 1 in every 2 people being diagnosed with cancer within their lifetime. 

What is it and why do I need it?

This type of policy will pay a tax free lump sum of money if you were to be diagnosed with a specified critical illness. The insurer will have a list of covered conditions that they cover and this will be available to you before purchasing the policy. The list usually has at least 50 claimable conditions. The amount you receive is dependent on how much you choose to take out when you receive your terms, but it can be a life changing amount when put into a potentially difficult position.

The idea behind critical illness cover is to provide you and your loved ones with peace of mind and ease financial stress, at a time where you may need it the most. Once the policy has paid out, the money is all yours to spend however you wish. Though the usual ways a person might spend this money could be:

• To cover loss of earnings if off work
• To make modifications around the home, such as a chair lift if needed
• To pay off a mortgage or contribute towards bills
• Private medical treatment
  
  

As mentioned, these are just some of the reasons why people take out critical illness cover and what they chose to spend their money on. Though some job roles require a certain level of health, of course having a critical illness doesn’t necessarily mean you can’t work anymore, some choose not to and have time to focus on themselves and undergo treatment.

Critical illness cover can also come under a few other names: critical illness assurance, critical illness insurance, and the alternative serious illness cover (SIC). No matter what the policy is called, the basis of them are the same:

• You will pay a monthly premium to insure your health over a set period of time
• You will receive a tax free sum of money from a successful claim

How do I get it?

The application process can be quite straightforward, it is very similar to that of a life insurance application.

The application will ask questions about you, your health, hazardous activities and your occupation. The application will then go to the underwriters to assess, and a few things can happen. 

1. The insurer might offer you terms straight away for you to either accept or decline.
   
   
2. They might request further information about some of your answers, they could ask yourself or a medical professional who you have seen.
   
   
3. Unfortunately, there are times where an insurer might postpone an application for a certain period of time, for example if you are waiting on test results or are undergoing investigations for your health.
   
   
4. There are also times where an application might be declined.
   
   

In these last two instances, speaking with a protection insurance adviser such as us here at Cura, can be hugely beneficial. It’s at that point where we would reconsider the insurer we chose and maybe approach a specialist insurer, or look at what other options might be available to cover your needs.

I have a health condition, what now?

Having a pre-existing health condition doesn’t have to completely rule out your chances of having critical illness cover. It is something which the insurers will need to know about, and quite often they might request a medical report from your GP to get a full picture of your health.

The terms you receive will depend on the health condition that you have. For example, if you have mild asthma the insurer might offer you cover with normal terms (no price increase), whereas if you have had breast cancer in the past,  then the insurer might increase the premium of your policy and exclude this from the policy (so you wouldn’t be able to claim for this condition in the future). Again, this is something which a protection insurance adviser can help with as they can steer you in the right directions and offer advice on steps to take.

Case studies

• A woman approaching 40 came to Cura needing protection insurance to provide security for her mortgage and family. She was born with a dysplastic non-functioning kidney which caused her no issues. She also took medication for an underactive thyroid and had a double hernia repair. We arranged a policy for life and critical illness cover, covering her for £80,000 for 20 years with a premium of less than £35 per month.
  
  
• A man in his early 40s approached Cura needing protection insurance. He had been diagnosed with schizoeffective disorder just a couple of years prior to speaking with us. To cover his protection needs for his mortgage liability we arranged for him to have £500,000 life insurance and £250,000 critical illness cover for 25 years, with a monthly premium of just under £101.
  
  
• A couple had come to us needing protection insurance in place. The woman was in her mid 40s and had been diagnosed with classical Ehlers-Danlos syndrome before reaching his teens. We were able to get a life insurance and critical illness policy covering them both for £246,000 for 25 years, with a monthly premium of £120.
  
  

As experts in the field, the advisers of Cura know which insurers are best to suit the needs of people with certain health conditions or with particular circumstances. We do separate research for each of our clients to make sure we really are getting the best possible options. If critical illness cover is something that you’d like to know more about, we’d love for you to get in touch.

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