Many of us spend more on our social life, than we do on insuring our livelihood with a work-related insurance policy. For younger people in particular, the concept of being laid low by a life-threatening condition which puts an abrupt end to your working life seems a remote prospect indeed. But if you are aged from 20 to 65, health insurance could well be one of the best investments you ever make, for yourself and your family – and you are more likely to need this cover in those years than your life policy. Here are our responses to some client concerns in relation to the key health insurances.
‘I’m young and healthy – I don’t have a need for healthcare cover’
Not true. You are much more likely to have serious illness during your working life, than to die. That means that, between now and age 65, you are much more likely to need critical illness cover or another health-related insurance, such as income protection or mortgage payment protection, than to need your life insurance.
“What am I covered for with critical illness insurance?‘
Each insurer has their own list of what they include or exclude under ‘critical illness’. In general, a critical illness is a condition which befalls you and renders you unable to work. You have to survive the condition, in order to receive a payout. Some providers quote over thirty conditions in their policies, but most would agree that the core critical illnesses are cancer, heart bypass, heart attack, kidney failure, major organ transplant, MS and stroke. On the other hand, many policies exclude back trouble and stress, which are two of the major causes of being long-term unfit for work. A payout from a critical illness policy comes in the form of a once-off lump sum. Many people calculate their cover with a view to paying off their mortgage, but policies should not be limited to that.
‘So is mortgage protection insurance a different product?’
Yes, mortgage protection cover is an insurance designed specifically to cover your mortgage payments, should you be rendered unable to work. It makes a monthly payment, usually directly to your mortgage lender, and for a fixed period only, which is often 12 months.
“What is the difference between those two, and income protection insurance?’
Again, the name declares what the policy is designed to do. Income protection insurance pays out a regular monthly sum when you become unable to work. This is usually less than your previous salary, and may run for an agreed period only, although there are much more expensive variations on income protection that can pay out even up until your retirement.
“How do they decide if I’m entitled to a payout?’
If the insurer doesn’t look at your health records when you apply for cover, they will certainly do so, at the latest, if you make a claim. It is crucial that your application gives a true and full picture of your health. If you have not been totally honest, this is classed as ‘non-disclosure’ and can invalidate your chances of a payout later on.
