Critical illness insurance: pros & cons

If you’re looking for a way to protect your family from the financial burden of an unexpected illness, then critical illness insurance is one of the best options available. It can compensate for the loss of income which results from being unable to work.

But before you apply, it pays to understand the benefits and drawbacks of owning a policy. We'll discuss some of the pros and cons of critical illness insurance, and why you should consider buying cover.

What is critical illness insurance?

Critical illness insurance is a type of insurance policy that provides a lump sum payment if you become seriously ill or injured. It helps provide financial protection for you and your family when you need it most.

You can use the money to meet everyday expenses, such as mortgage payments, household bills, and private medical treatment.

The policy pays out in the event you are diagnosed with a critical illness or serious injury covered under your policy agreement. Such illnesses can include:

Not all illnesses are covered, and each insurer has their own list of conditions that you will be covered for, so be sure to shop around to get the plan you want.

Just like any type of insurance policy, you are required to pay a monthly premium for cover. The cost of these premiums depends on a number of factors, such as age, health, and the amount of cover needed.

You will also be required to fill out an application form covering your health and lifestyle. It is important to answer these questions as honestly and accurately as possible as failure to mention something important could result in an application being declined. This process is called underwriting.

Learn more about underwriting.

Why do I need critical illness cover?

If you are healthy, you probably won’t consider buying critical illness insurance. However, there are a number of reasons why a critical illness plan could be suitable. If you need time off work to recover, the funds could help you pay your rent or mortgage, your utility bills and other day to day costs. This allows you to focus on simply getting better.  

Another thing to consider is that critical illness cover will usually also pay out if you died. If you have a family that are dependant on your income, and you unexpectedly pass way, then they may not have enough funds to pay off debts, mortgage repayments, funeral costs or day-to-to-day living costs etc.

Since critical illness cover also usually includes serious injuries like loss of limb, sight or deafness, you might also want to think about buying cover if you work in a high-risk industry where you could face a serious accident or injury at any time.

For example, if you work in construction, mining, engineering, manufacturing, or anything else high-risk, you could be exposed to dangerous chemicals, machinery or heavy equipment. In these situations, it makes sense to take out critical illness insurance to protect yourself and your family.

You can talk to one of our expert advisers about Critical Illness Cover by calling:

01392 436 193

Please note: The insurance products offered by Cavendish Online have no cash-in value at any time. If you stop paying your premiums your cover will stop, your policy will end, and you will receive no benefit. If you have not claimed before the end of your chosen policy term, the policy will end, and no benefit will be paid.

How much is critical illness cover?

The price of critical illness insurance varies on a number of different factors. These include:

• Age - The cost of critical illness insurance increases as you age. As you get older, so does the risk of suffering from a chronic illness.
   
• Smoking status - Smokers typically pay more for their critical illness insurance than non-smokers.
   
• Family history - People who have a family history of serious illness sometimes pay more for premiums.
   
• Pre-existing conditions -Pre-existing medical conditions, such as diabetes, previous cancer treatment, and heart disease, can increase the cost of your premiums, and in some cases it may not be possible to secure critical illness insurance.

If you don't want to go down the critical illness route, you might want to look into term life insurance instead. This type of policy covers death only rather than illness. It provides your family with a cash lump sum upon your death, supporting them with various living costs. However, it only protects you for a set period of time.

If you're looking to apply for critical illness cover, or you're unsure about your options, speak to an adviser. They’ll provide guidance as to whether you may need life cover or critical illness cover. They'll also take into account your circumstances, as well as how much cover you may require.