5 reasons to take out critical illness insurance
Critical illness insurance is designed to pay out a tax-free lump sum if you are diagnosed with a critical illness. It’s not considered essential so what reasons are there to take out a critical illness policy.
You’re worried about the future
If we look at the statistics then you’ve every right to be a little worried about the future holds. According to Cancer Research UK, your lifetime risk of getting cancer is just 1 in 2.
Whilst we can do all we can to prepare ourselves health-wise, for example by not smoking, eating a healthy, balanced diet and getting plenty of exercise there’s absolutely no guarantee that we won’t be affected. Having a serious illness such as cancer, even if it’s treatable, can have a huge affect on your finances. You may have to give up work, or take time off for treatment so taking out critical illness cover could offer you peace of mind. If you do become ill, you’ll be able to receive a lump sum payment which could cover many of your expenses.
You’re currently in good health
There is no time like the present to think about critical illness insurance. Critical illness cover will be much more affordable if you are young, in good shape with no pre-existing conditions, are at a healthy weight and don’t smoke.
An insurer will base the cost of the premium on the likelihood of them having to pay out – if you are currently fit and healthy with no issues then you’ll pay much less for your insurance than someone twice your age who has a more chequered medical history.
If you do have pre-existing conditions, this does not mean you won’t be able to take out critical illness cover. It may just mean that this condition is excluded from your policy. If you fall ill with a critical illness that is related to your existing condition you won’t receive any payment. Always check out the terms and conditions of your policy before you buy, including any common exclusions.
You have a mortgage to pay
Paying a mortgage is a huge responsibility, and if you fall behind on your payments it could put you at risk of losing your home. Many people could cope financially if they were off work for a couple of weeks with a minor illness, but a critical illness could mean that you are off work for months, even indefinitely in some cases.
If you found yourself in this position, would you be able to keep up with the mortgage payments? If you’re the main breadwinner taking out critical illness cover could give you a lifeline if you were to fall ill and had to give up work.
Critical illness cover offers a lump sum that could potentially pay some or all of your mortgage, or at least cover other expenses that may occur during this time. Alternatively you may want to consider income protection, which pays a regular income to you during the time that you are off work.
You have children
Most critical illness policies will also include family members under the age of 16. No-one wants to imagine their child having a serious illness, however it could have a huge impact on your life. Many parents have to give up work to care for their child at home. Critical illness cover will often pay out a set amount when a child becomes ill in addition to the main policyholder, and this shouldn’t affect the original amount of cover under the main plan. So if you were to become ill in the future, you will still be able to make a claim on your policy.
You want an insurance policy that you’ll benefit from personally
Life cover is a popular choice of protection insurance, however if a claim is made, you won’t directly benefit. If you have a family that may struggle financially after your death, then life insurance is worth considering. The chances of a sudden death are much less likely than contracting a serious or terminal illness, so it may be more beneficial to consider critical illness cover that you can benefit from whilst you are still alive. Some life insurance providers will allow you to add critical illness cover as an extra but as with all policies it’s worth shopping around to make sure that a joint policy is good value compared to two separate policies.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of So Smart Protect or So Smart Financial Services.