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Critical Illness Insurance And Life Insurance Cover For Better And For Worse.
By: Rachel Lane
There are three main types of insurance cover you can buy to protect yourself
and your family: life insurance, private medical insurance and critical illness
insurance. If you want your financial health to be completely bionic then you
could choose all three types of insurance, but if your family finances are more
restricted, it might be better to insure yourself with critical illness
insurance and life insurance. Critical illness insurance should not be confused
with private medical insurance or even income protection insurance and it’s
important that you do a full evaluation of your needs before you pursue the
different insurance options.
The purpose of critical illness cover (CIC) is to fill a gap that is left by
traditional life insurance policies, which will only provide a pay-out on the
death of the policy holder. CIC provides a tax free lump sum following the
diagnosis of one of a number of life-threatening illnesses or certain types of
surgery. The sorts of situations usually covered include the diagnosis of
cancer, a stroke, a heart attack, the loss of a limb and many other serious
disabilities.
Critical illness insurance policies are typically sold to cover mortgage
repayments and are often sold alongside a life insurance package to ensure the
borrower can repay the loan in all circumstances. It is worth noting that if a
combined life insurance and critical illness cover package is taken out, then it
would not be unusual for an insurer to pay out for only one of the events.
Therefore if the policy holder suffers a critical illness and then dies at a
later date, there will only be one pay-out – for the initial illness. It is
essential whenever you take out a policy that you make sure it covers all of
your needs and those of your family. Don’t estimate how much cover you may
actually need. You will additionally need to consider the period for which you
want critical illness cover, such as a set number of years to cover the mortgage
or no fixed period at all, so you can maintain the policy as long as you need
it.
The critical illness insurance market has come under increasing pressure in
recent years, as the number of claims has soared, survival rates increased and
medical science has made it far easier to detect serious conditions much
earlier. These factors have prompted some serious questions about the viability
of critical illness cover, particularly guaranteed products.
For the majority of people, the most important benefit of critical illness
insurance is to protect their mortgage and most mortgage protection policies
allow you to include life insurance and critical illness cover. If you already
have life insurance in place, you can buy an additional, separate critical
illness insurance policy.
Resources:
http://www.abi.org.uk/ The Association of British Insurers
http://www.moneynet.co.uk/insurance/index.shtml Consumer Insurance Comparison
Research
http://www.moneynet.co.uk/home-car-travel-insurance-guide/index.shtml Insurance
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