Critical Illness Cover: Do You Need It?

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What is critical illness cover?

Critical illness cover (CIC), sometimes referred to as critical illness insurance, is a specific type of insurance that pays out a large lump sum in the event that you suffer a serious illness or injury that prevents you from working – either permanently or for an extended period.

CIC is typically bought as an additional cover on top of a standard life insurance policy, though it can be purchased on its own.

Understanding life insurance and critical illness cover – how does it work?

There are a lot of similarities between life insurance and CIC. Each has premiums based on your age and health, and both pay out a large sum of money should the insured situation occur (death or illness, for example).

The real difference between the two is that life insurance is designed to pay out to support your family if you pass away, and CIC is there to protect you financially if you contract a specified illness or sustain an injury that prevents you from supporting your family.*

When you buy life insurance and critical illness cover as a package, you typically get a better rate than if you were to purchase them separately, potentially saving you hundreds every year!

What illnesses are covered by critical illness insurance?

As a life insurance broker, we work with a range of top UK insurance providers at Quick Quote Protect, making sure we get you the best deal available for your circumstances. Unfortunately, this also means we cannot give a detailed list of illnesses covered, because each insurer is different.

Working out what constitutes a critical illness is a difficult thing, and it can involve a number of smaller, detailed conditions that may or may not be included.

What is important to understand is the essence of critical illness cover – which is to provide financial support if you fall ill or are otherwise injured and unable to work. Typical illnesses or injuries include:

• Cancer
• Stroke
• Heart Attack
• Multiple Sclerosis
• Alzheimer’s
• Blindness
• Kidney Failure
• Loss of Limb

Remember – it is key that you discuss with your advisor the different illnesses covered by your specific policy and if there is something missing that you are concerned about, ask if it is possible to find a different policy that covers your needs.

Is it worth taking out CIC? What if I get ill with something not covered?

Like all forms of insurance, critical illness cover is there to protect you against a range of things, but no, it is not all-inclusive. There is always a chance that you may fall ill with something CIC doesn’t cover.

But without CIC, everything is something not covered!

Critical illness cover is broad enough to cover most common situations and illnesses – it is rare to fall ill outside of the cover. As long as you’re aware of exactly what you’re covered for, then there should be no problems.

Does CIC just cover me? What about children’s critical illness cover for my family?

Unlike life insurance (that only covers the policy-holder), critical illness cover will also give you a measure of cover for your children – this is typically somewhat less than the full amount, but still a sizeable value.

Insurers understand that when a child falls seriously ill, the knock-on effect for the family, both in terms of time and finances, can be huge. Children’s cover is typically included in all instances, but it is worth double-checking before you buy it.

Joint cover with a spouse is also possible, although it is usually more effective to have a separate policy each.

How much CIC do I need?

At Quick Quote Protect, we recommend getting an amount of CIC to cover you for three years without you having your usual income – typically, the payout amount should be three times your annual salary.

Because CIC covers a range of different situations, it is statistically five times more likely to be called upon than a standard life insurance policy before you are 65. Unfortunately, this also means that high-value CIC policies can come with higher premiums.

One other simple value that you can use to determine your CIC cover is the value of your mortgage – set your critical illness policy to the value of your remaining mortgage at the time of taking out the policy and you can rest assured that if you fall significantly ill, you will not lose your home. Often, it is the home that causes the greatest financial stress and knowing it is taken care of is a massive burden lifted.

Does CIC always pay out in full? What are the critical illness payout rates?

Depending on your policy, your insurance provider may have certain clauses that you’ll need to check over and be happy with before buying. For example, they may offer ‘part payment’ for things like treating the early stage of a disease in the sincere hope it won’t progress. There may also be lower percentage payments available for shorter-term illnesses, but not totally debilitating injuries.

While these detailed levels of CIC can seem complicated, it is easy to understand if you consider the metaphor of a car. When you have damage to one wing of a car due to an accident, the insurance provider will pay for repairs to that wing and continue with the insurance – not immediately pay out the total amount of the car and close the policy. Critical illness cover is often developed in a similar way, meaning that a part payment can be made without permanently affecting the policy, allowing you to get treatment or pay for needed changes to your life and then continue as you were.

It is always worth discussing these part payouts in detail with our advisors when you call.

CIC insurance pros and cons

Pros

• Provides a tax-free lump sum in the case of a sudden illness or injury
• Can help pay for treatment in the early stages
• Part payment for less severe illnesses
• Helps you adapt to major changes in your life
• Some policies include free alternative therapies, nurse support and more
• Takes away the worry of family financial security
• Includes cover for your children
• Available as a combined policy with your life insurance or as a stand-alone critical illness policy

Cons

• Large levels of cover can be expensive
• Specific critical illness list is unique to each insurer
• Can be complicated to understand

I’m not the main breadwinner – why should I get CIC?

Even if you are not the one out working every day, becoming seriously ill will have a major impact on your family finances. Your partner or spouse will have to take time away from work to care for you and changes may need to be made to your home and transportation to adjust to your situation.

The benefits of critical illness cover are an important help for any adult in the UK, no matter what their employment situation or relationship status is – we can all do with that extra help if something happens to us.

CIC is not just for the person who has the main source of income – it is an important level of health insurance available to all.

Life insurance with Quick Quote Protect

At Quick Quote Protect, we are specialists in providing detailed advice on all life insurance products, from over 50s life cover to income protection insurance.

Our experienced team know the ins-and-outs of all the major CIC policies in the UK and are here to help you get the best cover possible. Give us a call today or fill in our short contact form for more information.

*Make sure you fully understand what illnesses and injuries you are covered for with your specific policy, as each life insurance provider can differ.