Life Insurance and Critical Illness Cover: Do I Need Both?

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Having a family is a huge undertaking – way more than we ever believe before we go ahead and do it. And every family is different, so determining the best way to provide financial security for your family can be complicated.

Dipping your toes into the water of life insurance can feel like you are about to be attacked by piranhas, but don’t worry too much – for the most part, insurance brokers are less like sharp-toothed flesh-eating fish and more like those little fish that nibble your skin to give your feet a makeover!

What's the Difference Between Life Insurance and Critical Illness Cover?

At its most basic, life cover comes in two forms:

1. Insurance that is designed to look after your loved ones if you die.
2. Insurance that is there to help you if something happens to significantly impact your life, such as a severe illness or injury.

Life insurance forms the first category and will only pay out after your death. Critical Illness Cover (CIC) is one of a number of products designed to help you should you become unable to financially support yourself or your family – in this case, Critical Illness Cover will pay a lump sum if you were diagnosed by one of a selection of severe illnesses or injuries.

What are the types of life insurance?

There are four main types of life insurance, each with a specific purpose in mind:

• Whole of Life Insurance – this type of insurance is the easiest to understand, and offers a guaranteed payment when you die, no matter when that might be.
• Level Term Assurance (LTA) – level term insurance covers you for a specific length of time (for example, until you retire, or until your youngest child is 21).
• Decreasing Term Assurance (DTA) – decreasing term cover provides affordable life insurance designed to pay off any outstanding mortgage should you die before the house is fully paid.
• Over 50s Cover – over 50s insurance is similar to a whole of life plan, but comes with guaranteed acceptance and no medical questions for those aged over fifty.

When working out the best life insurance policy for you, it is important to understand the need and reason for the money. At Quick Quote Protect, our experienced advisors will build an insurance plan suited specifically for you based on one or more of these key four policy types.

What are the other types of cover available?

Each of the other products can be purchased either as part of an overall life insurance package, or individually. Stand alone critical illness cover, for example, is rare but if it suits your needs then it may be the perfect cover for you.

The two types of cover that will pay out in circumstances other than your death are:

• Critical Illness Cover (CIC) – this will provide a lump sum should you be diagnosed with a specific illness or injury that prevents you from working or otherwise hinders your ability to provide.
• Income Protection (IP) – providing a level of support above and beyond any standard sick pay package your employer may offer, income protection pays a substantial amount monthly in lieu of your salary, keeping you afloat through long-term illness or injury. Unlike critical illness cover, income protection insurance assumes that you will eventually return to work after recovery and replicates the regular payment of a salary rather than offering a lump sum.

Do I need life and critical illness cover?

Only you can determine what level of life insurance and critical illness cover you require, but we do have some guidelines that we tend to follow as advisors. Ask yourself the following questions:

Will my family be financially stable if I die?

Are the following things all true?

• You have no dependants, or they are all grown up.
• Your work within the family can be replaced without additional money (whether going out and providing an income or doing the important work at home).
• There are no outstanding debts to pay, or a mortgage to cover.
• There are enough savings to pay for a funeral.
• You have no reason to worry about inheritance tax.

If all these things are true, then you probably could do without life insurance. Life insurance does mean paying a monthly premium, and even though we can offer cheap life insurance and critical illness cover, it never comes for free. If you can do without it, then of course it would be unnecessary to buy it.

If, however, any of these things are not true, then life insurance is an important financial security for your family.

Will I be OK if I fall ill?

Does your work provide a substantial sick pay scheme? Are you entitled to a substantial pension if you become unable to work because of an illness or accident?

Falling sick can come with no warning and it can throw every plan you had away. One day you are going to work as usual, and the next you find yourself completely incapacitated – but the bills don’t simply go away. There’s still a mortgage or the rent to pay, there’s still food that needs to be bought and energy bills to be covered.

In the UK we have an enviable level of welfare support, but are the minimal offerings available through benefits enough for your family to continue as they were?

Critical illness cover provides more than simply money to pay the bills, it can also crucially provide the help and assistance you need to get superior medical treatment and aftercare support.

Remember – if you fall ill, it often means that other members of your family, especially your spouse or partner, have to dedicate their time to helping you cope, and this can lead to an even greater level of financial hardship.

How much is life insurance and critical illness cover?

All forms of life insurance are based on your health and age. Are you fit and well? Do you smoke? Are you older or still in your 20s? The cost of life insurance and critical illness cover are heavily affected by these factors, but are still surprisingly affordable – in fact, if you are young and healthy, you can pick up combined premiums for as little as £10 per month!

In reality, however, people don’t turn to life and critical illness insurance until they are in their thirties and older and have maybe let themselves go a little. With all the factors involved, we can’t offer a specific quote without more information, but for substantial cover of ten times his annual salary, an average man in his 40s should look to set aside between £50 and £100 per month to provide combined life insurance and critical illness cover for himself and his family.

Getting an accurate quote – speak to Quick Quote Protect

At Quick Quote Protect we can provide you with life insurance with critical illness packages or look at critical illness cover only.

If you want to know if critical illness cover is worth it, or to discuss how much life insurance and critical illness cover you need, give us a call at Quick Quote Protect or fill in our contact form today, obligation-free. We promise we’re not piranhas!