Critical illness cover what is it and do I need it?
April 29, 2008
This article will go some way to explaining what exactly critical illness insurance is when and how it can be used and whether or not you actually need it as part of your overall financial planning.
A lot of people are fully aware of life insurance and quite a few of them already are aware of the fact that they need some sort of life insurance as part of good financial planning. This is not least when they have a mortgage or a loan to insure. That said considerably fewer of them are aware of critical illness insurance let alone the important role it can actually play in good financial planning.
The thing about critical life insurance is that it is possible to add it to a policy as additional insurance or it can be used independently as a policy in it’s own right. A critical illness insurance policy is one that will cover the policy holder in the event of they’re contracting one of a number of major illnesses previously stipulated in the policy. Among those critical illnesses covered there is cancer, major organ transplant, stroke, heart attack, to name just a few.
The important thing about this type of insurance is the fact that payout is not dictated by any outcome of the condition. It is purely dictated by the fact that you suffered the condition in the first place. This means that should one of the worst things actually happen such as you suffering a heart attack, then the benefit will pay out and this is regardless of the fact that you may make a full recovery, which is something that does happen quite frequently nowadays, especially with modern day medical advancements.
So quite a valuable benefit to have, as a standalone plan, but also as an additional benefit on any other type of life insurance. So what plans can you have it added to? You can have it on level term insurance you can add it to whole of life assurance and most notably you can add it to mortgage protection.
This type of policy is most beneficial alongside mortgage protection or mortgage life insurance. If you had a mortgage and you died you would obviously want the coverage that would enable the mortgage to be paid off, but what if, instead of death, you contracted a major illness? That critical illness could mean that you were unable to work and so were without a source of income. This is where critical life insurance plays such an important role with regards to your finances. You are left to convalesce in the secure knowledge that your outgoings are being taken care of.
Over and above mortgage life insurance critical illness cover has a bit of a rich mans reputation. That’s to say that people only take it out if they can really afford it and many find other things that require money be spent rather than critical illness cover. This is a shame as within your normal situation this type of cover is most valuable, once the loans are paid off additional money can be a huge benefit, maybe to adapt a home or even to take you on a world cruise, I probably don’t need to teach you how to spend it but I am sure you get the picture.
In conclusion, critical illness is a much more useful form of cover than you think. Some people consider it better even than life insurance as you can get to see the benefits of it without having to die. This type of cover is definitely recommended with mortgages and loans, but at the end of the day only you can decide if critical illness is what you think you need or can afford. The best plan of action is to speak with your financial advisor to discuss your options so that you have the right sort of cover and level of protection for you.
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