When buying life insurance, you may notice the option to include critical illness cover.
With so many details to fill in and boxes to tick, it’s not surprising that many people skip over it. However, if you’re steering clear due to lack of knowledge about it then it’s important to get clued up. Here we’ll outline how it works, the benefits it provides, and hopefully help you determine whether or not it can help you.
How it works
Critical illness cover (CIC), also known as critical illness insurance, pays out a fixed lump sum if you’re diagnosed with a critical illness. This illness could be any one of a number, but for more information it’s best to look at the policy details supplied by the provider. As an insurance product it’s bought alongside life insurance, and thus the period of time as well as any other parameters, such as your amount cover, will be the same.
The impact of the news that you or anyone covered has befallen such an illness should not be underestimated. However, CIC is unique in the financial relief it can provide immediately, and whilst it won’t change the diagnosis, hopefully it will alleviate some of the emotional stress you’ll inevitably feel. With less time spent worrying you’ll have more time to be with family and friends and to focus on getting better.
Figures from the Office of National Statistics, show that we are four more times more likely to develop a critical illness than die by the age of 65, and these statistics are of course far higher for individuals with a history of illness in their family.
These figures only emphasise how important CIC can be; many individuals take out a life insurance policy that provides cover up until a point when they’ve paid off any significant debts and are generally more financially stable. However, as demonstrated, the likelihood of them falling ill during this time and thus being unlikely to maintain their usual income is far higher – a pay-out at this point can be a proverbial godsend.
In recent years the NHS has experienced significant cuts, having a drastic impact on the drugs available to patients. Due to more conservative advice on funding given by the NICE, the National Institute for Health and Clinical Excellence, extremely effective but costly drugs like the cancer-fighting Avastin are not readily available. Despite its positive treatment rate, this drug in particular is only available privately to those who can finance it themselves, and it is in such circumstances that critical illness can provide its most practical benefit. The lump-sum you receive could be used to fund private treatment independently, going lengths to improve your prognosis and showing the additional benefit CIC carries on top of providing protection for your family’s finances.
The added cost
Whilst it all seems well and good now, critical illness cover will of course add to the price of your premium. The increase, however, is dependent on individual factors. As an example, here are figures using our life insurance quote system:
Female aged 30, non-smoker, with guaranteed £100,000 of life cover for 25 years:
- Including CIC: £25.53 a month
- Without CIC: £6.55 a month
As you can see, CIC can add almost £20 to your policy premium. This will of course vary from person to person, but it’s also worth noting that you may see a greater difference in price when using comparison services which do not provide a commission-free discount like we do when purchasing life insurance.
Weighing up the worth
An increase in your premium when adding CIC is inevitable, as it’s simply so much more likely that the provider will have to pay out for a claim. As such, critical illness cover isn’t the most appropriate policy for anyone on a very strict budget. If you’re in the fortunate position to be more financially flexible though, it can be a very worthwhile use of your money, and you and your beneficiaries may be thankful for your prudence.
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