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
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.
Plugging the protection gap
If you're one of the increasing number of people who've become self-employed in recent years, you may have found the switch has left you without the employee benefits you previously took for granted.
Making the change from employed to self-employed is a big step and it's one more people are taking.
The number of self-employed people in the UK now stands at 4.80 million, representing 15% of the working population.
But while some may find they can earn more as a result, they might overlook the importance of replacing lost employee benefits like income protection and life insurance.
Death in Service
Many employed people automatically benefit from life insurance arranged on their behalf by their employer. This would pay a multiple of their annual salary were they to die while still employed, which could then be used to pay off a mortgage or maintain their family's lifestyle.
Some employees receive a proportion of their salary for a period of time if they become unable to work due to illness or injury (over and above statutory sick pay levels) and may benefit from access to private medical treatment.
Clearly, moving from employment to self-employment would mean these benefits cease, and potentially
leave a protection 'gap'.
Mind the gap
Fortunately, the benefits you may have received automatically as an employee are also available to you as a self-employed individual - and they may be more affordable than you think.
Income protection insurance will pay you a monthly income if you become unable to work through illness
or injury. Self-employed workers should consider this an essential piece of protection because it can help
prevent your family suffering financial hardship and allow you space to recover more quickly without the
burden of financial worry. Many insurance companies also provide support for customers to help them return
to fitness as quickly as possible.
Life and critical illness plans can be individual plans or combined. Life insurance will pay out a lump sum or
a regular income to your dependants if you were to die during the term of the cover. Critical illness plans pay out a lump sum if you are diagnosed with a specific illness. Both can help secure your family's financial future.
Private medical insurance (PMI) may be considered less of a priority than either income protection or life
insurance, given the treatment you are entitled to via the NHS. For those seeking to replicate all the benefits
they may have enjoyed when employed, there are a range of policies available at varying price levels. If you are interested in PMI we can introduce you to our PMI referral partner.
Are you covered?
If you're self-employed it's easy to make sure your employment status doesn't put your long-term financial
security - and that of your family - at risk. Get in touch to discuss your protection options.
Why crowdfund the cost of your healthcare?
Crowdfunding is becoming increasingly common among people who need healthcare that’s not freely available through the NHS.
Protection Websites such as justgiving.com, crowdfunder.co.uk and gofundme.com are full of campaigns from families trying to raise funds for treatments, or seeking help to avoid the financial hardships that a serious illness such as cancer or stroke can cause.
Even though the vast majority of proven effective treatments for cancer are funded by the NHS, 2,348 crowdfunding campaigns to cover medical treatment were launched on JustGiving in 2016, a seven-fold increase from the year before when there were just 304.
One fundraising charity, Tree of Hope, specialises in helping these young people and their families by running campaigns to raise the funds they need to pay for specialist care.
Supporting young people
Although cancer in young people is rare, it is still the most common cause of death for children aged up to 15. Sadly, 1 child in every 500 under 15 is diagnosed with a form of cancer and 2,200 teenagers and young adults (15-24 years old) are diagnosed every year.
Don’t rely on crowdfunding
Instead of crowdfunding at a time when you should be concentrating on treatment and recovery, taking out a critical illness plan will help protect a breadwinner from the financial impact that the diagnosis of a serious illness could have on their life or their family's life.
Many critical illness policies also include cover for children (including step and legally adopted) as an automatic benefit. This can pay out a lump sum if a child is diagnosed with a specified critical illness or is hospitalised.
To discuss critical illness protection for you and your family, please get in touch