Critical Illness ...
It is a sad fact that many of us will know someone
who has suffered from a critical illness. Despite
medical advances, critical illness is still all too
common. Critical illness conditions include such things
as cancer, heart attacks, strokes, multiple sclerosis,
leukemia, and total permanent disability.
Being diagnosed with a critical illness doesn't only
spell emotional and physical turmoil. It can also
mean financial disaster. If you are unable to work
due to a critical illness, or if you have to give
up work to look after a child with a serious medical
condition, you could quickly find yourself struggling
to meet your financial commitments such as the mortgage
and other regular bills. And all this at a time when
you may be having to find additional money to pay
for medical treatment or the costs of ongoing medical
care.
Fortunately, there are steps you can take to help
protect yourself from the financial implications of
suffering from a critical illness. Whilst the doctors
get on with their job of looking after your health,
critical illness insurance can help you avoid worrying
about money and leave you free to concentrate on getting
better.
Critical illness insurance provides you with a substantial
tax-free cash lump sum if you are diagnosed with a
serious illness. Different policies cover different
ranges of medical conditions, but the one thing they
all have in common is that they will pay you your
chosen level of benefit as a tax-free lump sum in
the event of your being diagnosed with one of the
insured conditions.
Providing critical illness cover for a sizeable sum
is cheaper than you might imagine, and can make a
huge difference to your quality of life in the event
of a serious illness. For example, once your claim
is paid, you could use the money to clear your mortgage
or take a holiday to help aid your recovery.
It is easy to argue that anyone who has a mortgage
should definitely take out critical illness protection,
but the same can apply to anyone who has regular financial
commitments that they would find hard to meet in the
event of being unable to work following diagnosis
of a serious medical condition. In fact, in many ways,
critical illness cover is even more important than
life insurance, because in this day and age, advances
in medical science mean you are more likely to initially
survive a critical illness than you are to die from
it.
When you suffer a serious illness it can take a long
time to recover. You may have to give up work completely
to begin with, and it may be a number of years before
you are fit enough to return to full time employment.
If your critical illness leaves you with a permanent
disability you may have to change career, thus leaving
you with a lower salary than prior to your illness.
When deciding what level of critical illness cover
to opt for, there are a number of factors to take
into account. If you were in a position where you
were unable to work for a number of years after your
illness, then you might need to live off your critical
illness benefit for longer than expected. Therefore,
it is sensible to try to cover a sum at least four
or five times your current annual salary. Remember
to take into consideration your mortgage any other
outstanding loans and credit card debts when deciding
on a level of cover.
All critical illness policies have what is known as
a survival period. This is the length of time after
you fall ill before your claim can be processed. This
is normally in the region of two to four weeks. Then
the insurer will need to gather medical evidence and
reports from your doctors to ensure the validity of
your critical illness claim. This process can take
a few weeks depending on the amount of information
required. The insurance companies who provide critical
illness cover have specialist medical claims staff
who will make every effort to get your benefit paid
to you as quickly as possible.
In addition to providing critical illness protection
for yourself and your partner, it also makes sense
to add on cover for your children if you have any.
Unfortunately, serious illness amongst children is
more common than you might like to think. Historical
claims records show that a substantial number of claims
are made on children's critical illness insurance,
mostly for leukemia.
You might assume that if one of your children suffered
a critical illness, your household finances would
be unaffected. After all, they are not wage earners.
However, in reality you may want, or need, to give
up your full time employment to look after your child.
In addition, their illness may give rise to additional
costs for medical treatment or nursing care. Money
is the last thing you want to be worrying about if
one of your children is taken seriously ill.
A large number of critical illness insurers automatically
provide cover for children, so it is worth checking
this aspect of the policy when deciding which critical
illness provider to opt for. One of the most important
things to be aware of when choosing a critical illness
protection plan is the list of illnesses and conditions
covered by the policy, as this varies from one insurance
provider to another.
All providers cover a certain range of core conditions,
such as cancer, stroke, heart attack, and multiple
sclerosis. Other companies may provide cover for additional
conditions such as loss of sight, loss of limb, or
benign tumors. Statistics show, however, that the
majority of claims are for one of the core conditions,
which every insurer has to cover.
Critical illness insurance can be bought with either
guaranteed rate premiums or reviewable rate premiums.
The former are normally more expensive, but the premiums
are guaranteed to remain the same throughout the life
of the policy. With reviewable rates, the premiums
are not guaranteed and so you may have to pay more
or less per month (almost certainly more!) as the
years go by.
Critical illness policies stay in force for a fixed
period. The period of cover you select is known as
the term. A short-term policy might run for perhaps
ten years. Or you might want a longer term policy
of 25-years to coincide with your mortgage. It is
important to remember that your cover will end completely
as soon as the term is finished.
The other two things which will cause your policy
to terminate are if you die or if you make a critical
illness claim. Once you have claimed for a serious
illness, it can be difficult to get new cover, as
you are seen by insurers as a higher risk. Some companies
offer a critical illness buy-back option, meaning
that if you do claim on your critical illness policy
you can still take out cover again with that same
insurer. A buy-back facility will increase your monthly
premiums, but for the sake of what may only be a few
pounds per month, it is well worth considering from
the outset.
As you will see from everything we have said here,
critical illness policies can differ in price and
provide differing levels of cover and benefits. In
addition, some policies cover just critical illnesses,
whilst others combine critical illness protection
with traditional life assurance.
It is therefore important to take expert independent
financial advice before deciding which critical illness
policy is right for you.
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