What is critical illness insurance and why is it important
What it does
Serious illness and critical illness insurance plans pay out a tax-free lump sum on the diagnosis of a range of serious (but not fatal) conditions. These conditions include things like heart attack, stroke, cancer, major organ transplants and many others. The conditions covered will vary depending on the insurer.
Serious and critical illness insurance often comes as an optional addition to a life insurance policy, but can also be purchased on its own. Some policies will pay out a partial amount of your sum assured, while others will only pay out once. This means that although they won’t necessarily replace your regular income, you can still use the money towards medical treatment, mortgage repayments or anything else you choose.
Why you might need it
Many people buy serious and critical illness insurance when they take on a major commitment, like a mortgage, or when they start a family. However, as any of us could suffer a serious illness at any time and would most likely appreciate our financial burden being lightened, it’s fair to say that this type of cover is relevant for most of us, no matter what life stage we’re at.
Replacing an existing critical illness policy
If you already have critical illness insurance, you should think carefully before you cancel your existing policy and take out a new one. This is because your health may have deteriorated since taking out the cover and pre-existing medical conditions would not be covered by the new policy.
Recent advances in the treatment of certain conditions, such as
cancer, are also worth considering, as a new policy might be more restrictive than an older one when it comes to paying out on claims for certain conditions. We will be able to identify whether any of these issues are applicable to your own circumstances and advise you accordingly.