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Critical illness insurance and life insurance cover for better and for worse.
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 Guide
About the Author
About Rachel:
Rachel writes for the personal finance blog Cashzilla - personalfinanosaurus - licensed to roar.
Rachel spends her not-so-free time researching and writing personal finance articles, but she gets through it with Smarties and Fruit Pastilles.
To read more about Rachel and Cashzilla visit http://www.cashzilla.co.uk
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Disclaimer:
This is financial information, not advise. Read my article, but
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