In past times, if you were taken ill you recovered and went back to work, or you died and your family received your life assurance (if you had any). Nowadays, modern medicine has increased the survival rate for most illnesses, although they may require a long recovery period, so that many people can find themselves with serious conditions for which a cash lump sum payment is a significant aid to providing support and paying costs during recovery.
To be told by your doctor that you have had a heart attack and that the stress of your work is partly to blame, so stop working or you may die is not, if you have a mortgage to pay and a family to keep, advice that is easy to take.
But, if you have a critical illness policy, you could receive a lump sum payment that will allow you to follow that advice. You can stop working, relax, concentrate on getting better, and not worry about the bills.
How it works
A critical illness policy pays out a lump sum if you find that you have any one of a number of specified conditions or need a particular operation. Payment is normally made on either diagnosis or, if you survive, a pre-determined time period following diagnosis, or progression to some specified level of seriousness, depending on the policy conditions.
For conditions that start off as minor ailments but become more serious, the policy will normally only pay out when certain criteria are met. For example, for a cancer claim the cancer must usually be malignant or invasive.
The conditions covered vary from insurer to insurer, and you should check with the product provider to see exactly which conditions are covered, but these will normally include:
- some forms of cancer
- some forms of heart attack
- some terminal conditions
- others - there will frequently be a long list of other conditions such as kidney failure, Multiple Sclerosis, Motor Neurone Disease, loss of sight, hearing and limbs, and others, the details of which may vary between insurance companies.
One important omission is death
Death may or may not be included in the policy coverage. If excluded it will mean that, while your premium will be lower, there will be no payment if you die in an accident, for example.
The reason for making death cover optional is that many people have sufficient cover from other policies, employers' schemes etc, and so prefer to use their own money purely for the cover they do need - critical illnesses.
We can help determine what level of cover you need, what sort of policy you need and help find the most suitable and cost effective insurance company to provide the cover.
If you own or control a company and have valuable staff whose absence due to a critical illness would cause a problem, (e.g. the sales manager whose personal touch closes client sales, or the technical specialist whose skills are essential to providing solutions for clients) then as a company you can insure the company against this risk. We will be pleased to discuss this with you.
Gary Jones trading as Chewton Financial Planning is an appointed representative of The Whitechurch Network Limited which is authorised and regulated by the Financial Conduct Authority. Financial Services Register No: 190859 http://www.fca.org.uk/register.
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