Critical illness insurance is designed to provide a financial safety net should you suffer a serious illness that results in you being unable to work. When it comes to deciding if this sort of policy is a good fit for your particular set of circumstances it is worthwhile spending a little time examining different types of insurance policies to see if they are more in line with your particular needs and requirements. For example, you may find that life insurance is a better choice. This type of policy provides either a regular income, or a lump sum, to your dependants if you die during the policy term. Income protection insurance is also worth considering as it pays out a regular sum in the eventuality that you become unable to work due to illness or injury. Before you decide whether critical illness insurance is really necessary it is useful to examine the benefits offered by these types of insurance to see if they are more suitable.
When deciding whether you would benefit from a critical illness policy you need to make sure that you would be able to keep up with the regular monthly payments. If you were to fall behind with your payments then all cover would be cancelled. Also bear in mind that critical illness cover has no cash value therefore if you do not suffer from any of the illnesses listed in the policy you would not benefit financially. Examples of the types of illness covered by a critical illness policy are stroke, multiple sclerosis, heart attacks, and certain types and stages of cancer. Most policies will also pay out if you sustain a permanent disability; either due to injury or illness. Once you make a claim the policy comes to an end as you are only allowed to make one claim during the policy term.
If you do receive a pay-out then you can spend the money as you wish. Some people use it to make any necessary adaptations to their home, and some use it to pay off debts. The money you receive is tax-free, but you must contract one of the illnesses stipulated in the policy in order to qualify. Not all illnesses, even those classed as being serious, are included in the policy, and there are stipulations regarding the severity of the illnesses listed.
When asking yourself the question; is critical illness insurance really necessary, think about how you would survive financially if you were to contract a serious illness and you needed to spend a substantial amount of time off work. If you have insufficient, or no savings that you could use to pay for household expenses and day-to-day living costs during this time then critical illness cover would probably be of benefit. However, if you live with a partner whose income is sufficient to cover all your outgoings, or you already have critical illness cover via your employer then critical illness premiums would most likely prove to be an unnecessary expense.
Before you commit to a critical illness insurance policy be sure to read the small print first. The majority of critical illness plans do not provide coverage for pre-existing medical conditions, and they do not pay out a lump sum, or regular income, to your beneficiaries when you die. Some plans, however, do pay out a lesser sum of money in the event that you contract a less serious illness, or if one of your children is diagnosed with one of the illnesses listed in the terms and conditions of the policy.
If you think that critical illness insurance meets your needs then make sure that you spend time shopping around for the best price. However, when doing this also ensure that you compare policies on a like for like basis, as different providers offer different benefits. It also pays to have a look online to find out how many claims your provider of choice has turned down in the past. When filling in the application form make sure that you answer the questions truthfully as any errors or omissions could result in any future claim being turned down.
Before you take out critical illness cover you can help to keep the cost of your premiums down by making lifestyle changes if necessary, for example, losing weight and stopping smoking. It is also advisable to take out critical illness cover when you are young as premiums rise with age. This is because you are more likely to suffer from a serious illness when you are older therefore you are deemed as being more at risk of making a claim.
With regard to cost, your insurer will take into account a number of factors to determine how much you will be expected to pay. These factors include: your age, your occupation, your state of health, your weight, and whether you are, or ever have been, a smoker. The cost of your premium also depends on how much cover you wish to take out; obviously, the greater coverage you require, the higher the price.
Taking out critical illness insurance is a big decision and it is important that you think carefully about whether it is really necessary, or whether other insurance plans may be more suited to your circumstances. If you do decide to take out cover then you may wish to consult an experienced insurance broker or independent financial advisor for more advice.