How Exactly Does Critical Illness Work?

By Vicki Coleman

None of us go through life thinking we’re going to get a serious illness. It’s no way to live, quite frankly. But sometimes it’s necessary to take a moment to consider the possibility.

It’s not all that unlikely, unfortunately. If you’ve ever seen Channel 4’s Stand Up To Cancer coverage, you’ll know already that the odds against getting the dreaded disease aren't all that great: “1 in 2 of us will get cancer in our lifetime,” we’re told.

So, it makes sense that we should prepare for the worst and hope for the best, doesn’t it?

Critical illness cover provides some protection if you’re diagnosed with a serious illness, paying out a tax-free amount of money for you to use how you like. That could be to cover health-related costs or to cover your income while you make a comeback.

Do you really need critical illness cover?

Until recently, many people have been prepared to roll the dice and not bother with critical illness insurance. But Covid changed mindsets somewhat, with the pandemic showing how we’re more susceptible to serious illness than we ever imagined.

If you’re unlucky enough to be struck down by a life-threatening illness, the only thing that should be on your mind is making a recovery. But if the illness forces you to stop work and interrupts your income, you might be left with a financial burden to think about.

Research shows that 83% of people with cancer in the UK face an average £891 a month on top of their usual household bills. Those extra costs come from things like travel, hospital parking, increased electricity, heating and water use at home etc.

Without critical illness cover, you and your family will need to dip into any savings, assuming that your income is affected.

If you’re comfortable with that prospect, critical illness insurance might not be for you. But if you don’t think the coffers would cover it, you might want to start sizing up a policy.

What illnesses are covered?

The number and variety of conditions covered differs from insurer to insurer, but there are seven core conditions that tend to be shared by all critical illness policies:

●      Cancer

●      Issues requiring a coronary artery bypass

●      Heart attack

●      Kidney failure

●      Major organ transplant

●      Multiple sclerosis

●      Stroke

Permanent disability caused by illness or injury is also usually covered by most policies.

If you’re diagnosed with one of the conditions covered by the policy, you should receive a payout from your insurer which could amount to tens or hundreds of thousands of pounds, given in one lump sum.

To avoid a situation where the insurer isn’t prepared to pay out for a condition listed, provide as much detail as possible about any medical conditions you have or have had upon taking out a policy. Some policies won’t cover illnesses triggered by pre-existing medical conditions.

How much is critical illness cover?

The reason you might be tempted to gloss over a pre-existing health condition is to keep your insurance premiums as low as possible. But there are other ways to go about getting a deal on critical illness cover.

For example, you could opt for fixed premiums which mean the amount you pay to keep up the cost of cover will stay the same throughout the life of your policy. This allows you to budget accordingly and not face premium rises.

Also, you can sometimes lower your premiums by increasing your waiting time – that is the period after taking out a policy during which you cannot make a claim.

Other variables you can control are the length of cover and the payout amount. Otherwise, the price of your policy depends on your age, medical history, lifestyle and occupation.

You can expect higher-than-average premiums if you have:

·       Any pre-existing medical conditions

·       A history of illness

·       Family members who suffer from any serious illnesses

Critical illness cover can be bought on its own or with a life insurance policy – it’s usually cheaper to buy the two together, but you might find that the cover is not as comprehensive.

When you combine your life and critical illness insurance policies into one package, you are usually limited to one payout. So, if you claim for critical illness, your life insurance cover will typically end.

What are the alternatives?

The cover that is most similar to critical illness is income protection. If you’ve read our article on income protection (wink, wink, nudge, nudge), you’ll know there are subtle but important differences between the two types of cover.

Unlike critical illness cover, you do not need to have a certain condition to be eligible for a payout with income protection insurance – you can claim for conditions such as back pain and depression providing that you’re signed off work.

For the time that you’re off work, you’ll receive regular payments that replace part of your income (note: not your whole salary). It can be claimed as many times as you need to while the policy lasts.

The other obvious alternative to critical illness cover may come from your employer. They might offer a benefits package that covers a period of long-term sickness. However, most employees of private companies are only entitled to Statutory Sick Pay (SSP) – the minimum amount the government says employers can pay.

If you earn over £120 per week and are off sick, that amounts to £96.35 per week.

What are your next steps?

The best way of understanding if critical illness cover is right for you is to generate some quotes. It couldn’t be simpler – just provide us with a few details and we’ll do the rest.

If you don’t wish to proceed with any of the quotes, no problem – you can rest assured your information will be stored securely and won’t be shared without permission. In other words, you won’t be bugged by insurance providers if you decide income protection insurance isn’t for you!

So, what do you have to lose? Compare critical illness insurance quotes via QuoteSearch today.