Do you need critical illness cover?

No one knows what's around the corner, and if you’ve got a family to take care of, having the right financial protection in place can provide peace of mind. Many people take out life insurance to provide financial security, but what if you were to be diagnosed with a specific critical illness?

Thinking about what might happen when we aren't here can be scary, but consider what could happen to your financial situation if you were to be diagnosed with a critical illness. Would you have to stop working? What impact would that have on your day-to-day life? 

Critical illness cover - what is it?

Critical illness cover is a type of insurance policy that can help you if you were diagnosed with a specified illness. It can provide a lump sum pay-out, offering a helping hand during a difficult time.

According to Cancer Research UK, 1 in 2 people will be affected by cancer at some point in their lives. The cash injection you could receive from a critical illness policy can provide financial support to help you and your loved ones through a tough time. With the pay-out from a critical illness insurance policy, you can continue to fund your children's future and help mitigate any financial impact you may face.

Why do I need this type of policy?

Critical illness cover can be incredibly advantageous for several reasons, particularly if you would not receive enough benefits in the event of becoming critically ill or don’t have enough savings to fall back on. In some cases, you may receive state benefits or benefits from your employer but it’s not always enough.

This type of life insurance policy can provide additional financial help at a time when it’s needed most. If you have a mortgage to pay, along with bills and childcare, having this policy in place can mean the financial burden is alleviated. The pay-out from a critical illness policy can also help with the following:

• Medical bills
• Travel costs 
• Modifications to may need to make to your home
• A nest egg for your family
• Replacing any income you may miss out on 
  
  

Being diagnosed with a critical illness can have a devastating impact on your life, and worrying about money should be the last thing on your mind during such a tough time. With a critical illness policy in place, you could focus your energy on your recovery. 

Does critical illness cover death?

Life insurance and critical illness don’t always come as a package, but you can take both types of cover out separately, or as one combined policy. If you take both out as a combined policy, you’ll only pay one monthly direct debit; although it’s important to remember it will also only pay out the full sum assured once and you’ll be covered on a first event basis.

You can also take both types of cover out separately. You’ll pay for two policies but as a result, you’ll be covered and protected for both outcomes, unless you pass away first.

Is the pay-out from critical illness taxable?

NO!

If you were to make a valid claim, and as long as you pay the premiums for your policy yourself, then the lump sum pay out from your critical illness policy would not be tax deductible.

This ensures that, if the worst case scenario were to happen then you would receive the full amount that you agreed upon when you initially arranged your policy. 

Children's critical illness cover 

Did you know that some major providers now offer children's critical illness cover included within your policy? Although you cannot get children's critical illness as a standalone product, making a claim on the children's cover would not affect a future claim on your own policy. 

No one wants to think about their child/children becoming unwell but being well-informed on what your policy includes is important. The conditions included in this type of policy varies depending on which provider you choose. For example, one of the UK's leading providers, Royal London, covers child specific conditions such as:

• Cystic fibrosis 
• Type 1 diabetes 
• Cerebral palsy 
• Down's syndrome 
  
  

At Busy Bee, we always highly recommend reading the specifics of your policy to have full clarity on what is included in your policy. 

Is it worth it?

Being diagnosed with a critical illness can have a huge financial impact, and on top of bills and a mortgage, it can be overwhelming. Critical illness cover can help to reduce some of this financial impact, and can be used for so many essentials such as medical treatment and everyday living costs.

Our protection specialists can provide free, tailored advice on your circumstances. We consider a variety of different factors such as, how much your monthly outgoings are, and how much you’d want to keep up the lifestyle your family is used to. 

The type of life insurance policy you choose can depend entirely on your personal and financial circumstances; everyone is different. To speak to one of our friendly protection specialists, get in touch with us today and let us help you.

Please note the above does not constitute as financial advice and may change dependent on individual circumstances and budgetary requirements.

DISCLAIMER: Life & critical illness insurance is not a savings or investment product and has no cash value unless a claim is paid.