Critical illness insurance is a straight forward policy that covers you in the event of serious illness or injury. The policy holder is awarded a lump sum from the insurer that can be spent on anything to make life a little easier during the recovery period.
Can be compared to:
- Income Protection Insurance – the policy holder themselves will receive a pay-out and not a beneficiary. The most prominent difference, though, is that the policy holder must have succumbed to some sort of illness or injury. If you have simply found yourself unemployed, you cannot claim on critical illness insurance like you would be able to with an income protection policy
Not to be confused with:
- Term Life Insurance
- Whole of Life Insurance
- Mortgage Life Insurance
- Mortgage Payment Protection Insurance
- Over 50s Life Insurance
Pay-outs from all of the above policies are only possible if there has been a death. Most critical illness insurance policies do not pay-out in the event of death because the lump sum is designed to make your life better if you become ill and not necessarily the life of those around you.
Critical illness insurance is perfect if:
- You have no savings to use as a safety net if something was to go wrong
- You have dependents
- Your employer does not offer a significant health package as part of your contract
- Your employer does not offer a very long period of sickness pay
- You are likely to have to make a lot of changes in your life if you were to be seriously injured
- You have a lot of financial responsibilities, i.e. monthly payments such as a mortgage, personal loans, finance, store cards, which would go unpaid if you were to become ill
- You enjoy an active lifestyle that includes dangerous or extreme sports
There are many different circumstances that could benefit from the purchase of critical illness insurance. If you feel it may be a route you would like to investigate further, please get in touch for our expert advice.