Critical Illness Cover

Business Protection

Critical illness pays out to the policy holder if they were diagnosed with a predefined critical illness that the insurance providers deem to be life threatening. It is paid out immediately whilst the policy holder is still alive.

Critical illness cover will provide a lump sum to the policy holder on a diagnosis of one of a range of specified illnesses, the range of illnesses will vary between insurance companies. It is designed to provide the policy holder and their family a lump sum of money to help through a period of recovery and to help pay for any changes in their lifestyle.

This may include paying off mortgage repayments or to supplement a salary during this tough time, critical illness exists to safeguard you against things like this should you become critically ill. The difference between life insurance and critical illness cover is that Critical illness cover is designed to pay out when you are diagnosed with a life-changing illness which is specified by the insurance provider. Not all illnesses are covered so you will need to be aware of what illnesses do result in a pay out and which don't.

The reason most people buy critical illness cover, or include it within their life insurance, is to replace the income lost if they were unable to work. This could either be permanently or for an extended period. Unfortunately, regardless of the condition you are in, there is little release from mortgage, credit card or car payments. The pay-out is also a tax fee lump sum that is paid to you immediately.

If you consider the fact you are 4-5 times more likely to contract a critical illness than die before the age of 65, and the protection the cover gives your family, the reasons many choose to take out critical illness cover become obvious.

Just like life insurance, if you stop paying premiums the policy will lapse and you will no longer have protection. For the same amount of cover critical illness is more expensive than life insurance therefore it is important that the premiums are manageable and affordable. Plans may not cover all the definitions of a critical illness. The definitions vary between product providers and will be described in the key features and policy document if you go ahead with a plan.

Your health and lifestyle will affect your monthly premiums and how much an insurer is willing to cover you for, therefore the younger the fitter and healthier you are the higher the sum of money providers are willing to insure you for. Your occupation may also affect your premiums, for example if you had a high-risk occupation that involved working at extreme heights.

Disclaimer: No information contained within this website should be construed as advice, you should seek professional advice based on your individual circumstances. This is based upon our understanding of the law of England & Wales and HMRC regulation and practice, both of which may be subject to future changes. (For residents of Scotland, Scottish Law and tax rates may be different)

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