Critical illness insurance is one of those long-term insurance policies that people put off and put off until they suddenly find themselves in need of one – and by that point it is too late.
Critical illness insurance does exactly what it says – it’s a long term policy that will cover certain illnesses listed within the policy. It’s designed to cover medical bills, any outstanding debt and any other major outgoing such as rent or a repayment mortgage.
IS THIS THE SAME AS LIFE INSURANCE?
These two policies are very different. Critical illness insurance doesn’t cover a person if they pass away. This is where life insurance comes in.
WHAT ILLNESSES ARE COVERED BY THE POLICY?
As the name suggests, this policy only covers serious illnesses or life-changing injuries. Serious illnesses such as strokes, heart attacks, blindness and auto-immune diseases such as multiple sclerosis. Some forms of cancer can be covered but this depends on the severity.
As an added benefit, children are covered free of charge on a policy. However, the payouts won’t be as much if you yourself become seriously ill or injured.
WHAT FACTORS WILL AFFECT THE COST OF CRITICAL ILLNESS INSURANCE?
Like other insurance policies, there are many factors an insurance agent will look at when assessing and determining the cost of a premium. Considerations such as age, current health, type of job you have and lifestyle will all affect the premium.
For example, if you are older and also smoke, there is a higher chance of health conditions and therefore expect to pay an increased premium. This is also true for people who work in dangerous jobs such as operating heavy machinery.
Premium costs will rise the older and unhealthier you get so if you are looking to take out a policy ask yourself if you are willing to make potential lifestyle changes in the future to ensure your premium costs remain low.
WHAT WILL YOU NEED TO PROVIDE TO THE INSURANCE COMPANY?
If you decide to take out a critical illness policy make sure to disclose your family medical history along with existing medical conditions that could affect the policy. You risk a payout being refused when you fall ill or critically injured otherwise.
WHAT ARE SOME DISADVANTAGES TO CRITICAL ILLNESS INSURANCE?
Critical illness insurance is a safe bet if you think a life changing event might occur but it does have some drawbacks. More often than not, the policy will have age restrictions along with a high premium to pay in. So ensure you will be able to afford the policy right from the outset. It’s also uncommon for these types of policies to be standalone, you will often require a life insurance policy too.
Remember, critical illness policies will vary from each provider. Not all of them will cover the same illnesses and injuries so ensure you do plenty of thorough research before deciding on a policy.