What is Life Insurance with Critical Illness Cover?

Life insurance can help to protect your dependants financially when you're no longer around. But what happens if you are no longer able to provide for your family while you're still alive? If you become seriously ill, you and your family may struggle financially. Critical illness cover is one option that could provide you and your family with some financial security should the unexpected happen.

In this guide we'll answer the question "what is critical illness cover" and explain the benefits to you and your family.

What is critical illness cover?

Critical illness cover is designed to help you and your loved ones cope financially if you are diagnosed with a serious illness or medical condition. It can be added to Mortgage Protection Life Insurance and Level Term Life Insurance. If you are diagnosed with one of the provider's specified illnesses, during the policy term, the policy will pay out a lump sum. This may be payable in addition to the life cover. You could use this in a number of ways such as to cover mortgage repayments, bills and any other expenses. It can also help you to cover costs incurred by your illness, such as home adaptations to allow you to concentrate on getting better rather than worrying about your finances.

Critical illness is often bought alongside a life insurance policy. Having both critical illness and life insurance may provide you with peace of mine that you'll be taken care of if you fall ill, but also that your loved ones will be looked after financially if you were to pass away unexpectantly. There is no cash in value with these insurances.

Which illnesses are covered?

The critical illnesses covered by your plan will vary depending on the provider. Cancer, heart attacks and strokes are all conditions that are commonly covered.

Other conditions that may be covered include:

  • Parkinson's disease
  • Bacterial meningitis
  • Organ transplant
  • Kidney failure
  • Multiple Sclerosis

Permanent disability caused by illness or injury may also be covered by some providers.

The policy key features for each insurance company's policy will be available when you compare quotes.

What is Life Insurance with Critical Illness Cover?

What might not be covered?

To buy a policy that combines life insurance with critical illness cover, you'll be required to provide details of your medical history, family history and lifestyle and may have to undergo a medical examination.

These medical checks can result in your insurer concluding that your application represents a greater than standard risk, and so may ask you to pay increased premiums, exclude a condition or, in some instances, reject your application.

Some other exclusions include:

  • Pre-existing conditions - some providers may provide life cover, but exclude critical illness cover due to pre-existing medical condition
  • Alcohol and drug misuse - your policy may not pay out for injuries or illnesses directly resulting from excessive consumption of drugs or alcohol
  • Dangerous sports - policies may exclude illness or injury brought about by hazardous pastimes such as boxing, racing and skiing

How much is critical illness cover?

The cost of critical illness cover will depend on a number of factors, including:

  • The amount of cover you need
  • Any pre-existing medical conditions you have
  • The terms of your policy
  • Your age

It may be tempting to go for the cheapest quote you can find, but this may not provide you with the cover you need. While it's important to find a policy you can afford, you need to balance this with cover that will be useful for you if you do need to make a claim.

Should I get critical illness cover?

Before purchasing critical illness cover, it may be worth checking that you don't already have cover in place as part of an existing life insurance policy or employee benefits package.

Even if you don't already have cover, you may decide critical illness cover is not necessary for your personal circumstances. This could be the case if, for example, your partner earns enough money to support both of you should you fall ill and were unable to carry on working.

However, the costs of becoming critically ill can be significantly high. Your partner may need to give up work to look after you, you may need to pay for professional full-time carers, or you may have to make adaptations to your home. With critical illness cover in place, you and your loved ones could receive financial security when it's needed the most.

Critical illness cover may be worthwhile if:

  • You have family or dependents who rely on your salary - If you were diagnosed with a specified illness, could your family afford to cover expenses such as the mortgage?
  • You do not have enough of savings to fall back on
  • Your employee benefits package does not include cover
  • Your partner does not earn enough to cover expenses and bills without your salary

Even if you are a single person with no dependents, critical illness cover may still be beneficial to help you cover everyday bills should you become unfit to work or to pay off your debts.

How do I buy critical illness cover?

Compare Cover offers two ways for you to purchase and compare critical illness cover: integrated critical illness cover which is integrated with a life insurance policy and independent critical illness cover which can be purchased alongside a life insurance policy.

Integrated critical illness cover

This type of cover is combined with your life insurance policy and gives you the same cover for both a critical illness claim and a death claim.

Integrated cover can work out cheaper than an independent policy but it's important to bear in mind that a combined life and critical illness policy will only pay out once. This is particularly important if you have a joint life insurance policy with your partner, as your policy will cease once either a 'full payment' critical illness claim or a death claim is made within the policy term.

Independent critical illness cover

This type of cover lets you choose different amounts of cover for your critical illness policy and life insurance policy.

If you make a claim on your critical illness cover, the critical illness cover will cease, but the life insurance death cover will continue. If you make a critical illness claim and receive a pay-out, a further claim can be made in the event of death within the term of the life insurance policy.

Full payments vs Partial payments

Some insurance companies offer partial payments for some critical illness conditions in addition to full payments. What this means is that in the event of you suffering a condition that has a partial payment, the policy would pay out a smaller amount which would be detailed in the policy documents. In this case the policy would continue, and you would still be able to make a full payment critical illness claim if you suffered an additional critical illness at a later date during the term of the policy.

Income protection insurance

An alternative to critical illness cover, income protection aims to pay a percentage of your salary if you are unable to work due to illness or injury, resulting in a loss of earnings. Unlike critical illness cover that pays out a single lump-sum, income protection pays a monthly benefit after you have been unable to work for a specified length of time. Payment will stop when you are able to return to work, when you retire or when the policy ends. Unlike critical illness cover, you can make more than one claim on your income protection cover.

This may be a good option if you would like the option of a regular income rather than a one-off lump sum and it may be cheaper than critical illness cover. However, the pay out from an income protection policy may be significantly less than the pay out from a critical illness policy, as you may only be off work for a short period of time.

Compare critical illness cover premiums today

It's really easy to compare quotes for critical illness cover with Compare Cover. You can compare the cost of premiums for life insurance both with and without critical illness cover to see if it's worthwhile for your needs and your budget.

Which critical illnesses will be covered by the policy?
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