Critical illness insurance is a policy designed to pay a lump sum or income on the diagnosis of certain life-threatening or debilitating (but not fatal) conditions such as a heart attack, stroke, certain types/stages of cancer, multiple sclerosis and loss of limbs.
Critical Illness Advice
The illnesses covered will be specified in the policy along with any exclusions and limitations – these differ between insurers. Critical illness policies usually only pay out once, so are not a replacement for income. You can use the payout to pay for medical treatment, pay off your mortgage or anything else.
Planning ahead makes sense
Because not everything in life is straightforward and things don’t always go to plan. We can help you prepare for the unexpected and put in place some financial safety nets in case anything happens to impact your family or disrupt your plans. Don’t put this insurance aside, get in touch with our advisers today.
Critical Illness Insurance, don't wait until it's too late
Critical Illness Insurance news & information
We have prepared some Critical Illness Insurance posts.
These may help you if your new to the market or just looking for extra information
What is insurance?
Almost every adult in the UK has taken out some kind of insurance policy – whether it’s to protect themselves, their home, their car, their possessions, or their beloved pets. But what is it?
An insurance policy is essentially a contract taken out with an insurer which pays out an agreed sum of money (in the form of an income or lump sum) on a valid claim. You can buy insurance to cover many aspects of life including your income, health, your business, your car etc...
Some types of insurance only last for a specific length of time (with mortgage protection, for instance, the cover would normally run for the same number of years as the mortgage) or you could buy a ‘Whole of Life’ plan which would pay out on your death.
When you buy a policy, you’ll need to make regular payments to the insurer to keep it going. If you make a successful claim, your insurer will pay you the agreed lump sum / income under the terms of the contract. If you don’t make a claim you won’t get your money back. Perhaps the two most well-known types of insurance are life insurance and general insurance. As it says on the tin the former is designed to cover the insured’s life and pays out a lump sum or regular payments to chosen beneficiaries on the death of the life assured. General insurance on the other hand, protects possessions such as cars, your home and contents, and even the family pet.
Clearly there’s no point taking out insurance if you don’t need it, but if you have a mortgage or people who depend on your income and you don’t already have cover, you could get into serious financial difficulty if the worst happened.
5 questions to ask
Before you decide on the type of insurance you might need it’s important to think about:
- Why you need the cover?
- How much you can afford to pay?
- What needs to be included in the cover?
- How long you might need cover for?
- Whether you need cover just for yourself and / or for loved ones?
If you’d like to know more about the types of insurance policies we can advise you on, or you’re worried you don’t have enough cover to protect yourself or your loved ones, please get in touch.
Conveyancing is an important part of the home buying process, and it’s important to note it’s required when both buying and selling a property.
So what should you consider when choosing a property solicitor to carry out your conveyancing? It’s important to use a qualified property solicitor who’ll be able to take care of a range of issues on your behalf, including:
According to an online survey of 2,000 adults by Royal London, half of those surveyed believe life insurance is essential for someone with a mortgage or dependants and yet only 60% of people with a mortgage have life cover.
While 60% of those surveyed with a mortgage have a life insurance policy, just 29% have critical illness cover and 19% have income protection insurance, suggesting that better education is needed to help make people more aware of the benefits of taking out protection.
We believe some kind of protection insurance should be considered essential for anyone who has a mortgage or people who rely on their income – or both. The financial impact of not having cover could be devastating; think about what would happen in your situation if the main breadwinner was unable to work for a long period of time, or was diagnosed with a critical illness. How would you fund your mortgage payments, keep on top of monthly bills or pay for treatment that isn’t available on the NHS?
For less than the cost of a daily cup of takeaway coffee* you can protect yourself and your family and help deal with any consequences that could occur from illness, accident, unemployment or death. That’s why, when we talk to clients about protection, we talk about value, rather than cost.
Overcoming the barriers
The main reasons why people feel they don’t need protection:
- Not seeing the benefit
- Not trusting that a provider will pay out
If you’re concerned you’d be wasting money every month because insurance providers don’t pay out, you might be surprised to know that 97.8% of claims were paid in 2017 – a record-breaking £5bn in income protection, critical illness cover and life assurance.
Protection insurance can provide a valuable safety net at a time you need it most. Please get in touch and we can discuss how it could benefit you.
*Quote basis: 35 year-old non-smoker, £250,000 decreasing life assurance and critical illness cover to cover a repayment mortgage, 25 year term, guaranteed premium. Premium of £58.72 per month is equivalent to £1.89 per day based on a 31-day month. Quote sourced via Openwork Select panel of insurers on 15 January 2018. Premiums are subject to an individual’s personal circumstances and medical history.
The value of protection
Buying a new home is possibly one of life’s biggest and most exciting events. It’s also a major financial commitment – one that could be with you for 25 years or more.
Your ability to maintain your mortgage payments relies on a constant income, so how would you continue to make your mortgage repayments if your income was reduced – or stopped? Here we look at two similar scenarios with very different outcomes.
David arranged a new mortgage with his financial adviser. They discussed protection insurance and David agreed to take out cover so that he could maintain the mortgage repayments if he had to stop work because of serious illness. As a father of two, David also wanted cover so that he could help maintain his family’s lifestyle. The mortgage went through and the protection insurance was put in place.
Feeling unwell just a few weeks later, David went to his GP for a check-up. After numerous tests he received the shocking diagnosis of thyroid cancer. David stopped work and started treatment. His adviser supported him through the claims process and the insurer paid the claim promptly and in full. Rather than having to worry about his financial situation, David was free to cope with a tough treatment regime and concentrate on getting better.
Thanks to his protection insurance, David maintained his mortgage payments and monthly bills. He even treated his family to a holiday as part of his recuperation. David made a full recovery, returned to work and life continued as normal.
Jane arranged a new mortgage with her financial adviser. She was advised to take out protection insurance that would cover the mortgage payments and help maintain her family’s lifestyle in the event she had to stop work due to serious illness. After thinking about the cost of the cover and the likelihood of having to claim, Jane declined.
Feeling overly tired a short while after the mortgage was put in place, Jane went to see her GP. After numerous tests she received the shocking diagnosis of thyroid cancer.
Jane had to stop work and apply for Statutory Sick Pay at the same time as coping with a tough treatment regime and looking after her kids. She started to struggle to cover her outgoings and had to use all her savings.
Unfortunately, Jane was forced to sell her house and move into a smaller property, turning her and her kids’ lives upside down. Even though she wasn't quite ready to, Jane had to return to work.
The importance of protection
You might be like Jane and think that it won’t happen to you, but one in two people born after 1960 in the UK will be diagnosed with some form of cancer during their lifetime and four in five people with cancer are affected financially. And if you think that protection policies don’t pay out, they do. In 2016 15,464 critical illness claims were made and 92.2% paid out an average £68,000.
There are a range of products available that can provide a lump sum or a regular income on death or diagnosis of a specified critical illness and they could cost less than you think.
Making sure you have the right protection in place is important. We can review your circumstances and the cover options available to you
Critical Illness cover can make a difference
If you’ve ever turned down a recommendation of critical illness because you can't see the value of it, this real-life case study might make you think again.
Peter Simpson is a successful commercial manager for a Berkshire-based firm. He’s married with three children aged 13, 11 and 9 and has a £297,000 mortgage. His wife gave up work to bring up the kids, making Peter the main breadwinner.
When he was 24, buying his first house, Peter had arranged to see an Openwork adviser who helped him sort out a mortgage and critical illness cover. Over the years, Peter’s circumstances changed; he got married, started a family and moved up the housing ladder. During that time he has stayed close to his adviser and updated his cover in line with his changing circumstances.
The value of critical illness cover
Peter has always been able to see the value of critical illness cover, particularly because his father had sadly died of cancer. Aside from covering his mortgage, Peter also wanted to make sure his wife and children would be OK financially if anything happened to him.
In December 2016, totally out of the blue, Peter had a stroke. He had stopped at a friend’s house on the way to work when he suddenly and unexpectedly experienced a terrible buzzing sensation at the back of his head. He lost the feeling in his right-hand side and his speech became slurred. Spotting something was obviously very wrong, his friend got him into the house and immediately called an ambulance. Within 45 minutes Peter was being treated in hospital with his wife by his side.
When he was back home recuperating, Peter started the claims process, which turned out to be extremely straightforward. After a few phone calls and emails Peter received confirmation that his policies would pay out in full and he could expect £380,000 in his bank account.
Avoiding the financial impact of serious illness
Thanks to careful financial planning and an appreciation of the difference a critical illness plan can have on the financial impact of a serious illness, Peter and his family now have the freedom to make choices.
They have been able to make two platform investments, one that would act as a pension for Peter’s wife, and the other to enable Peter, a higher-rate tax payer, to maximise his personal allowance every tax year. They have also reduced their mortgage and swapped it from interest only to repayment.
This case study highlights the importance of protection especially if you have a loan or you’re the main breadwinner.
Please talk to us if you think you need cover, or you need to update your existing provision.
Peace of mind for the cost of a coffee
Many of us pick up a morning coffee on the way to work - it's a little bit of luxury to start the day for just a couple of pounds. But did you know you could provide something even more satisfying for you and your loved ones for less than the cost of that coffee?
Peace of mind
Protection insurance (or, more specifically, life insurance, critical illness cover and income protection) should be considered essential - especially if you have a mortgage, or people who depend on your income.
A life insurance policy can provide much-needed funds if you're no longer able to work through illness, injury, or worse. There are even some policies that will also cover you for unemployment. Cover provides peace of mind because you know you and your family will be financially supported if the unexpected happens - and cover might be cheaper than you think.
When it comes to a claim…
If you've declined the offer of protection insurance in the past because you don't believe your insurer would pay out, think again. According to the Association of British Insurers (ABI), 97.3% of all protection insurance claims paid out in 2016, totalling £4.7bn. That's around £13m a day paid to households hit by the emotional and financial distress and disruption that an unexpected accident, serious illness or death can cause.
Things change - and so should your cover
Even if you already have one or more of these types of plans in place, it's still important to regularly review your cover levels. Personal circumstances can change and you should make sure your level of cover remains appropriate.
Next time you're in the queue wondering whether to go for a flat white or hazelnut mocha, why not consider a third option and choose long-term financial security for you and your loved ones. The satisfaction it can provide you is far greater than that from a coffee.
Based on latest data, a 35-year-old non-smoker looking for £250,000 decreasing life assurance and critical illness to cover a 25-year repayment mortgage, could pay a premium of £58.54 per month, equivalent to £1.88 per day based on a 31-day month.
Figures correct as at 7/8/2017
If you'd like more information on what sort of protection insurance would suit your circumstances, please get in touch.
Protecting your mortgage repayments
We think protection advice is imperative when you have a home or family you want to protect. So, talk to us about a mortgage and we'll talk to you about life cover.
Buying a house could be one of the biggest financial commitments you'll make: getting a deposit together
can wipe out your savings and paying your mortgage will take a chunk out of your income. So how would
your family continue to meet this commitment if you stopped earning?
When taking out a mortgage, it's essential to consider how you would continue to cover your mortgage
payments if you fell ill or died unexpectedly. There are a number of ways you can do this:
If you died suddenly, a Life Insurance policy would pay out a cash sum to your dependents. They could
use this to pay off their mortgage and keep the roof over their heads.
Mortgage Payment Protection Insurance (MPPI)
Also known as Accident Sickness and Unemployment (ASU) cover, MPPI covers your mortgage related
repayments if you can't work because of redundancy, accident or ill-health. Benefits are usually paid for 12
months although some providers offer 24 months' cover.
Critical Illness Insurance
Critical Illness Insurance pays out a lump sum if you're diagnosed with a specified critical illness such
as cancer, stroke or heart attack. You can use the cash payout to clear your mortgage, pay for medical
treatment, take time to recuperate or anything else you choose.
Income Protection can replace part of your income if you're unable to work for a long time due to illness
or disability. It will pay out until you return to work or the policy ends – whichever happens first. Income
Protection plans usually have a waiting period before the benefit becomes payable.
Choosing to protect yourself
When you take out a mortgage through us, we'll ask if you want to take out protection as well. What's more, we will analyse your lifestyle and any protection shortfall and recommend a protection plan that will help protect you and your family from the financial consequences of serious illness or death.