Threshold Mortgage Advice

Critical illness cover: what is it and who needs it?

A critical illness can turn life on its head and stop you in your tracks, leaving you unable to earn an income, take care of your own basic needs, or provide for your family in the way you usually would.

While the thought of getting seriously ill to this extent is unimaginable, a critical illness can strike at any time, and no one – no matter how healthy – is immune. Fortunately, with the right critical illness cover in place, you can receive a lump sum to tide you over while you recover, ensuring that your mortgage and other financial outgoings get paid, even if you’re out of work long-term.

In this blog post on critical illness cover, our Threshold Protection Team explain what critical illness insurance actually is and answer some of the most common questions about taking out a new critical illness policy for yourself or a loved one.

What is critical illness cover?

Critical illness cover (also called serious illness cover) is a type of insurance policy that pays out should you get medically diagnosed with a specified critical illness.

It’s similar to a life insurance policy, in that it pays out a lump sum, but the key difference is who receives the money. With life insurance, the insurer will pay out when the policyholder dies. With critical illness cover, the payment will go directly to the policyholder whilst he or she is still alive.

Another way of looking at it is: life insurance is there to provide financial support to your dependants or those you leave behind after you die. Critical illness protection gives you financial support if you can’t work as a result of your illness (either temporarily or permanently) or you are told you only have a short time left to live.

What is considered a critical illness?

A critical illness usually refers to a life-altering or life-threatening medical condition for which you might take a long time to recover, or never be the same again.

Examples of critical illnesses can include heart attack, stroke or specific types of cancer. Critical illness can also refer to degenerate diseases like Alzheimer’s and multiple sclerosis, or acquiring a disability such as blindness or paralysation, as a result of an accident that wasn’t your fault.

What illnesses does critical illness insurance cover?

What’s covered under a critical illness policy will depend on the insurer’s definition of what constitutes a critical illness. Not all afflictions or diseases that you consider to be critical illnesses will be automatically included. This is because critical illness definitions can differ from insurer to insurer. For that reason, we always advise our customers to carefully review all policy documents before going ahead, to ensure you’re happy with the critical illnesses your policy covers, and any exclusions.

When taking out a critical illness policy you’ll also be asked to complete a medical questionnaire and your insurer may choose to exclude certain conditions from the policy based on the answers you give. It’s important you answer these questions truthfully as any withheld information could affect your ability to claim in future.

Can I get critical illness insurance for my partner too?

Yes, you can apply for a joint critical illness policy in both yours and your partner’s names. Bear in mind however, that as soon as one of you makes a claim on the policy, the policy will automatically come to an end. The alternative is to each take out an individual policy, which will ensure you’re both covered until the end of the policy term, or the point at which you make a claim.

Do I need critical illness cover if I have health insurance?

While health insurance is great to have, it doesn’t act as a substitute for critical illness cover. Health insurance will enable you to be treated privately, with the cost covered by your insurer (up to an agreed level) but it won’t provide you with a lump sum of money you can use to cover your mortgage or other living expenses in the way that critical illness protection will.

How much critical illness cover do I need?

Our Threshold Protection Experts will help you to determine the level of cover that’s suitable for you. To do this, we’ll ask you a few basic questions about your financial commitments, dependants and other debts or outgoings, to arrive at a cover amount and policy term that should comfortably meet your needs.

Can I claim for more than one critical illness?

This depends on the terms and conditions of your policy, some providers allow multiple claims paying a percentage of the sum assured each time based on severity until the whole cover amount has been claimed.

How can I get critical illness cover?

If you’re interested in critical illness cover you can book an appointment with one of our Threshold Protection Experts. They will call you by phone and take you through the available quotes from our insurance partners, making sure you get the right level of cover to suit your lifestyle and circumstances.

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