What Is Critical Illness Cover?
What is critical illness cover? If you were to develop a serious illness, you may be unable to work. Critical illness cover could provide a tax-free lump sum. This would give you the ability to carry on living your life while undergoing treatment. While we all hope it never happens to us, this type of insurance could give you a certain peace of mind.
If you would like to learn more about critical illness cover, or get some help to find a policy that suits all of your needs, get in touch with Peak Mortgages & Protection.
Critical illness cover explained
Critical illness cover pays out if a policyholder is diagnosed with a critical illness. The cover will last for a fixed period of time. If you stop paying your premiums, your cover will stop too.
Your insurer will be able to provide a list of illnesses that the policy will cover. This list differs between insurers.
As an example, it might cover conditions such as cancer, HIV, loss of limbs, kidney failure or a stroke. But your policy might restrict the cases in which it will payout. For example, the condition may need to be a particular severity before you qualify for a payout.
What Happens If I’m Diagnosed With a Critical Illness?
If you’re diagnosed with a critical illness while your policy is active, the insurer will pay a lump sum to you. The amount will be set out in your agreement with them.
You don’t have to pay tax on money paid out, and you can use it in whatever way you wish.
You could use it to help pay off any outstanding debts or pay for medical bills. If you’re not able to work for a while, you could also use it to maintain a lifestyle you enjoy until you recover.
Life Insurance With Critical Illness Cover
Critical illness cover is often sold alongside life insurance. In fact, many insurers don’t sell critical illness cover as a standalone product at all.
Having two different types of cover might mean you pay a little more in your monthly premiums. But it does offer a convenient way of covering all the bases.
Be Careful Filling in Forms
It’s extremely important that you take a lot of care when filling in forms for your insurance. Your policy might not be valid if you supply information that isn’t true.
What that means is that you might not get the money that you need in a worst-case scenario.
If you realise you’ve made a mistake with the forms, contact your insurer as soon as you can to correct it.
Critical Illness Cover Mortgage
We hope that this has cleared up any questions you may have had about how to make a successful critical illness claim. If you would like to learn more about critical illness cover, or get some help to find a policy that suits all of your needs, get in touch with Peak Mortgages & Protection.
At Peak Mortgages and Protection, we love to help people. It’s important to make sure our clients are covered in case the worst happens as well as make sure the people important to you are looked after. When you utilise our services, you can rest assured in the knowledge that you are working with one of the top Protection Brokers in the country, having been nominated for this very category at this year’s British Mortgage Awards.
FAQs About Critical Illness Cover
What is Critical Illness Cover and How Does It Work?
Critical Illness Cover is a type of insurance policy designed to provide financial support if you are diagnosed with a serious illness. It pays out a tax-free lump sum to help cover medical costs, household expenses, or loss of income during your recovery.
This type of cover is particularly valuable for individuals who rely on their income to pay their mortgage or support their family. If you were to become critically ill, it could be difficult to manage regular financial commitments. The lump sum from a Critical Illness Cover policy can help ease this burden by covering medical treatments, adapting your home if needed, or simply maintaining your lifestyle while you focus on getting better.
Most policies cover a range of illnesses, including cancer, heart attacks, strokes, multiple sclerosis, and organ failure. However, coverage depends on the insurer and the severity of the condition. It’s crucial to read the terms carefully to understand which conditions are included.
Unlike life insurance, which only pays out when you pass away, Critical Illness Cover provides financial support while you’re still alive, helping you navigate difficult times without financial stress.
Do I Need Critical Illness Cover If I Already Have Life Insurance?
What is Critical Illness Cover and life insurance? Life insurance pays out a lump sum to your loved ones in the event of your death, ensuring financial security for your family. However, it does not offer support if you become seriously ill.
Critical Illness Cover is designed to help you financially if you’re diagnosed with a serious condition that prevents you from working or affects your ability to manage daily expenses. It can provide funds for private treatment, rehabilitation, or to cover your mortgage repayments while you recover.
Many people choose to combine life insurance with Critical Illness Cover to ensure both their family and personal finances are protected in different scenarios. Some policies allow you to add Critical Illness Cover as an optional extra, while others require a separate policy.
Ultimately, whether you need both depends on your personal circumstances, financial responsibilities, and how much risk you’re willing to take. If you rely on your income to support your family or pay a mortgage, having both types of cover can provide complete peace of mind.
What Illnesses Are Covered Under Critical Illness Insurance?
The specific illnesses covered vary by insurer, but most policies include serious conditions such as:
- Cancer (though certain types and early-stage cancers may be excluded)
- Heart attacks and strokes
- Multiple sclerosis
- Organ failure requiring transplant
- Parkinson’s disease
- Alzheimer’s disease or other forms of dementia
- Loss of limbs or permanent disability due to illness
Some policies may also include cover for conditions like benign brain tumours, severe burns, or loss of sight and hearing. However, insurers have strict criteria for what qualifies as a critical illness, so it’s important to check the policy wording carefully.
In addition, many policies offer children’s Critical Illness Cover as an add-on, providing financial support if your child is diagnosed with a serious condition.
Since medical advancements are continuously evolving, some insurers update their policies to cover additional conditions over time. Speaking with a protection specialist, like Peak Mortgages & Protection, can help you find the best policy that meets your specific needs.
How Much Critical Illness Cover Do I Need?
The amount of Critical Illness Cover you need depends on several factors, including:
- Your mortgage or rent payments – Ensuring you can cover these costs if you’re unable to work.
- Household expenses – Utility bills, groceries, and daily living costs.
- Outstanding debts – Any loans or credit card debts that need repaying.
- Medical treatment and care – Private healthcare costs, specialist treatments, or home adaptations.
- Income replacement – Covering lost earnings while you recover.
A general rule is to have enough cover to replace two to five years’ worth of your salary or at least match your mortgage balance. However, this varies depending on individual financial commitments and lifestyle needs.
When choosing a policy, consider how much financial support your family would need if you were unable to work. Peak Mortgages & Protection can help assess your situation and find the right level of cover for your circumstances, ensuring you have peace of mind should the unexpected happen.