Most of us have a life insurance policy, to ensure that our family is provided for at the end of our life, but far fewer of us have critical illness insurance.
However, if you are struck down by ill-health, your family may be deprived of your income, because you cannot work.
The figures may show that the likelihood of a critical illness is greater than you think.
The insurance companies tell us that 25% of all men, and 20% of women will be forced to give up work due to serious illness, before they retire. These are not only the elderly, approaching retirement age. Critical illness is just as likely to befall those who are relatively young.
In fact, the most common age for this to happen is 45, according to the insurance company Legal & General, and of those who claim for critical illness on Legal & General health insurance policies, 71% are under 50 years of age*.
Furthermore, over half of health insurance claims are due to cancer, and one in three of us will get some form of cancer during our lifetime**.
If you are unfortunate enough for this to happen, you may find that your partner must give up work as well, to stay at home and care for you. This can mean the loss of both family incomes and bring severe hardship, particularly if you have a mortgage, debts, and children in full-time education.
The consequences can be harsh. With the cost of university education now running to many thousands of pounds a year, a critical illness could block your children from completing their education, or force you to decide which one of your children gets to go.
Critical illness insurance
All of the above facts amount to one unavoidable conclusion: insuring yourself against long-term illness is just as important as insuring your life.
Critical illness cover provides protection against such an unexpected and abrupt ending to your working career.
It provides a single lump sum payout when you are diagnosed with one of a list of serious illnesses or medical conditions. This payout can be a lifeline that will pay off your mortgage, or provide a financial cushion for your family, to help see you through the personal crisis of losing your health. Many criticial illness policies also cover the health of your children, at no additional cost.
Which illnesses are critical?
While each of the various policies from the main insurers has its own list of illnesses that are covered, most cover the core conditions, including cancer, heart attack, stroke, kidney failure, major transplant, heart bypass surgery, and multiple sclerosis.
Reading the ‘small print’
For critical illness insurance, as with any form of insurance, every policy is different, and ‘the devil is in the detail’. In other words, it is essential to understand the small print. It is particularly crucial to understand the exclusions of any health policy, in other words, to understand what is not covered by the policy, as well as what is.
Making the application
The process of signing up for a critical illness insurance policy is equally important. Insurers often do not look at your full medical records when a policy is taken out. They rely on you to share all the information you are asked for, and even accidental failure to provide full details can render your policy null and void, if you later need to claim.
Get the right financial advice
This is why insurance should only be bought with the assistance of a qualified financial adviser, who has plenty of experience in dealing with applications, and knows the application process of your chosen insurance company.
Best of all is an independent financial adviser, who is not tied to one bank or insurer, and can look at all the various policies on the market. In other words, an adviser who can take what is known as a ‘whole of market’ approach.
Only an independent financial adviser can take into account your personal situation, and locate the critical illness policy that is exactly right for you.Â
* Figures relate to Legal & General insurance claims in 2007.
**Source: Cancer Research UK
