Should you have critical illness insurance?

Most people don’t dwell on the prospect of being diagnosed with a critical illness, for obvious reasons. But that also means lots of us might not have considered whether or not we should have insurance in case the worst happens to us. 

In fact, we’re probably not completely aware of the financial impact a diagnosis could have on us and our households – especially if you need to take time off work because of it, which is pretty likely. The reality is: the impact can be significant, especially if you’ve got financial commitments (like a mortgage) or financial dependents (like a partner or children) that could be affected. 

This is where critical illness cover can help. It provides a financial cushion, and peace of mind, in case a critical diagnosis could have significant – or even catastrophic – financial consequences in your life.

So what is critical illness cover?

Put simply, critical illness cover is an insurance policy that pays out a lump sum if you’re diagnosed with a critical illness. This typically includes things like: cancer, heart attack, stroke, organ failure, loss of limbs, loss of hearing or sight, multiple sclerosis, Alzheimer’s, and Parkinson’s. Crucially, it’ll only cover you for the conditions listed in your policy, so you should always read up on what those are before you buy.

Many insurers will also include cover for your children in a critical illness policy – at no extra cost, which means the monthly premiums you pay to be insured stay the same. Children’s critical illness cover often comes with slightly different T&Cs to your main (adult) cover, so again, it’s important to read all the policy details.

The main thing to note is that children’s cover is often included as an ‘additional benefit’, meaning it only pays out a proportionate amount of your cover amount if you need to claim, but doesn’t affect your main cover if you do. This means you could still claim your full cover amount for an adult diagnosis later on, if you needed to, even if you’ve previously claimed for a children’s critical illness. This handy guide will help you understand the ins-and-outs of adult and child critical illness cover in more detail.

And what is critical illness cover for?

This kind of insurance is designed to give you a financial cushion in the unfortunate event that you’re diagnosed with a serious illness – because a diagnosis can often bring with it unexpected financial consequences. If you need time off work because of your illness, for example, it might be difficult to keep up with your bills and everyday expenses.

Adding children’s cover to your policy is often a good idea because, if the worst happens and your child is diagnosed with a critical illness, you might need time off work to care for them – which can also have a financial impact. And even if you don’t have children yet, it could be worth adding children’s cover to your policy if you’re planning to have them in the future, especially as you can add it at no extra cost.

If you need to claim on your critical illness policy, the money is paid out as a lump sum. So, if you have £50,000 worth of adult cover and you’re diagnosed with one of the critical illnesses listed in your policy, that’s how much money you’d receive at once, tax-free. Ultimately, the money can be used for whatever you need – whether that’s keeping up with bills, paying for medical expenses, or making changes to your home as a result of your condition.

Why do people buy critical illness cover at the same time as life insurance?

The answer to this is simple: it’s just because lots of insurers offer combined life insurance and critical illness policies, which sometimes come with better benefits than if you buy them separately. Combined cover means being able to cover the risk of becoming critically ill and the risk of dying with one single insurance policy. The main thing to bear in mind with a combined policy is that it’ll only pay out the lump sum once – so if you claim your payout for a critical illness, your policy would end and you’d no longer be covered in case you die.

So, should you have critical illness cover?

If a critical diagnosis could leave you struggling financially, then yes, having critical illness cover is certainly a good idea. As with any insurance, it’s there to give you peace of mind in case you find yourself in that worst-case scenario – providing a financial safety net at a difficult time, so you can concentrate on recovery without having to worry about money.