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Most of us don’t like to think about the prospect of becoming critically ill. This also means that most of us haven’t considered how that situation could affect not just our health and wellbeing, but our homes, loved ones, and finances. But if you have a family, financial security in any eventuality is something you probably should be thinking about.
The good news is that in the case of being diagnosed with a critical illness, there is a kind of insurance you can buy to protect you and your loved ones in case this happening would affect you financially. It’s called: critical illness cover.
What is critical illness cover – and what’s it for?
In simple terms, critical illness cover is an insurance policy that pays out a lump sum if you’re diagnosed with a critical illness. It’s always important to check which illnesses are covered by an individual policy, because an insurer will only pay out for illnesses listed in yours. Policies usually cover you for things like: cancer, heart attack, stroke, organ failure, loss of limbs, loss of hearing or sight, multiple sclerosis, Alzheimer’s, and Parkinson’s.
The idea behind critical illness cover is to protect you against the financial consequences of a diagnosis. The consequences will be different per person, depending on your personal and financial circumstances, but here’s a couple of scenarios that’ll help you work out whether critical illness cover is something you should have.
Scenario #1: You’re a breadwinner and you become critically ill
If you’re a breadwinner in your household – i.e. someone (like a partner or children) or something (like rent/mortgage/food/bills) depends on your income – a critical illness diagnosis could have significant financial consequences. This is because, in lots of cases, having a critical illness usually means needing to take time off work.
It can also bring with it other financial demands, like medical bills, travelling to hospital appointments, or needing to make household alterations. If you have sick pay and/or savings, these can only keep you going for so long. What happens after that?
Critical illness gives you peace of mind that if this happens to you, and you’re a breadwinner in your household, you’d have a financial cushion in place in case you couldn’t work. This ensures you and your loved ones will be able to keep up with the cost of life, while you concentrate on getting better without worrying about money. It’d also help pay for any other unexpected costs that come your way as a result of your diagnosis.
Scenario #2: Your child becomes critically ill
You becoming critically ill has obvious financial consequences – but many families would also need a financial cushion if a child became ill, too, because it could also mean a breadwinner in the household needing time off work to support their child.
The good thing about critical illness cover is that you can nearly always add children’s cover to your policy at no extra cost. It’s definitely a good idea to do this if you have children, or are planning to have children/more children, as any critical illness in the household can have financial implications at a time when you least need them.
Do bear in mind that children’s critical illness cover often comes with slightly different T&Cs to adult cover – so again, it’s important to read all the policy details. You can read more about the ins-and-outs of critical illness cover, including the difference between adult’s and children’s cover, in this useful guide.
Do you need critical illness cover?
If you have a family who relies on your income in any way, whether through shared financial commitments or dependents, critical illness cover could be an important kind of protection to have in place. It can often be bought alongside life insurance, as many insurers offer combined products, so you can protect your family in case of two scenarios (you dying or becoming critically ill) with one product. And as with life insurance, critical illness cover pays out as a tax-free lump sum, so ultimately the money can be used however’s needed, giving you peace of mind in case an unfortunate diagnosis does come your way.
