Critical Illness Cover

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Think Plutus are expert advisers on critical illness cover. With our help, you’ll find the policy that works best for your circumstances and requirements. Read on to learn the ins and outs of critical illness cover and why it’s so important for many people to consider.

Once you’ve read through the details, you can contact Think Plutus if you have any questions or to arrange a consultation with one of our expert advisers.

What is critical illness cover?

Critical illness cover (also known as critical illness insurance) is an insurance product designed to offer financial protection in the event that you are diagnosed with an illness, medical condition or disability as defined in the policy. If you do have to make a claim, your policy will provide a tax-free lump sum (which is predetermined in the policy) that can be used however you wish.

In light of the impact a critical illness has on a person’s life, this lump sum is often used to supplement income, clear any existing debts, keep up with financial commitments and/or pay for modifications to the home (such as wheelchair accessibility, for example).

This type of policy typically only pays out once if a claim is made, after which the policy will cease.

How does critical illness insurance work?

Most insurers offering critical illness cover do so for a set term of a specified number of years. However, there are some specialist providers who offer whole-of-life policies.

Every provider will use its own internal actuarial rates to calculate a monthly premium to provide the amount of cover specified and the required term. The factors that are taken into consideration include:

  • Age
  • Gender
  • Lifestyle (things like alcohol consumption and smoking)
  • Health and medical history
  • Occupation (some lines of work are higher-risk than others)

What counts as a ‘critical illness’?

Different insurance providers will have different definitions of precisely what a ‘critical illness’ entails. Generally speaking, however, you can expect all policies to cover the following:

  • Heart attack
  • Cancer
  • Stroke
  • Multiple sclerosis

Certain forms of these conditions may not be included in the definition, or there may be some variation in how they are perceived. Thus, it is important to fully read the policy documents at the very first opportunity. Insurance experts like Think Plutus are very familiar with these documents so please don’t hesitate to ask us to check for you if you have any doubts.

Among the other illnesses and conditions that may be covered by critical illness insurance, you will probably see things like:

  • Total permanent disability
  • Liver/kidney failure
  • Loss of speech
  • Coronary artery bypass surgery
  • Amputation
  • Alzheimer’s disease
  • Motor neuron disease
  • Loss of sight/hearing
  • Serious brain injury
  • Paralysis
  • Third-degree burns

If you’d like to find out more about the wide range of medical conditions that different providers cover under critical illness insurance, contact Think Plutus and one of our experts can speak with you in more detail.

Why do I need critical illness cover?

Everyone has their own unique set of personal circumstances, so everyone’s ‘needs’ regarding critical illness cover are different. However, if you know that a long-term illness would put you and your family in financial jeopardy, this type of cover could offer you peace of mind.

The following questions are important:

  • Will I be able to keep up with mortgage payments if I suffer critical illness?
  • Do the provisions from my employer, my savings and the state offer sufficient cover to keep up with my financial obligations if I become critically ill?
  • Would my dependants need additional support if I were to be incapacitated by illness?

Once you’ve answered these questions, your ‘need’ for critical illness cover might become more apparent. If you feel that it could be beneficial for you, get in touch with Think Plutus and arrange a free, no-obligation consultation with one of our experts. We can answer your questions and explain how critical illness cover could offer a safety net in the event that something goes awry.

Is critical illness cover a requirement for my mortgage?

While it is not a ‘requirement’, most mortgage experts will strongly recommend that you include critical illness cover in your plans. A mortgage is the largest financial outgoing for virtually any household and if you are rendered unable to earn the money that pays it, you could end up losing your home.

Critical illness cover provides the peace of mind of knowing that your mortgage commitment would be taken care of if you became critically ill.

Should I take out income protection in addition to critical illness cover?

Again, this is usually recommended by most experts. An income protection policy will pay a percentage of your normal income for a set period if you are rendered unable to work by sickness or injury. It can also cater for multiple claims, whereas critical illness cover only provides a single lump-sum payment.

The illnesses that a critical illness insurance plan covers are usually very specific and defined, whereas income protection offers a far broader definition of what’s covered.

For example, if you had a fall and broker your arm, rendering you unable to work for several months, you would be covered by an income protection plan but NOT by a critical illness policy. If you’d like to ask an expert about the options for cover, contact Think Plutus and we can make that happen.

Critical illness insurance vs life insurance

If you ask an expert, they will always tell you that it isn’t good to be over-insured OR under-insured. Critical illness and life insurance premiums can vary quite considerably, so it helps to understand the ways they can complement one another when seeking to arrange sensible, affordable insurance policies.

Critical illness insurance will pay out if you are diagnosed with any of the conditions defined in the policy. However, life insurance policies will typically only pay out if the diagnosis you receive includes a prognosis that indicates you are likely to die within the next 12 months. Thus, if you already have life insurance cover in place, you should know that critical illness cover can be complementary to it.

For example, it might be possible to recover from a serious illness in 12 months, but not a fatal one. By having insurance cover that would enable you to keep up with your financial commitments for a year, critical illness insurance could work in tandem with life insurance to give you the best possible cover. After all, if the serious illness is thought likely to cause your death before those 12 months are up, you may also be able to receive the life cover lump sum in addition to what you get from your critical illness policy.

It can get quite complicated, so expert advice can be invaluable. You need to fully understand the nature of the financial support on offer for a range of scenarios. Expert advice can enable you to take out the best combination of critical illness and life cover to maximise their effectiveness for you.

Critical illness cover vs income protection

Taking the role of life insurance into account is important, but you must also weigh up the benefits of critical illness cover alongside income protection.

Income protection typically comes in two forms if you are incapacitated by serious illness or injury:

  • Income protection: Once called ‘permanent health insurance’, this pays out a monthly sum until you are able to return to work or retire.
  • Short-term income protection: This alternative option costs less, but the monthly sum it pays out only lasts for a limited period – typically 2-5 years.

Both of these options have their advantages in providing the lifeline of income if you become too ill to work for any period of time. The primary difference between them and a critical illness policy is that they pay out an amount each month based on your usual income, instead of a single lump sum.

Self-employed people often find critical illness insurance or income protection to be good options as they offer maximum peace of mind.

The type that would be best for you really depends on the type of protection that would suit your needs and circumstances. It may be helpful to speak to an adviser at Think Plutus to get expert input in your decision-making process.

Frequently asked questions

Not found the answers about critical illness cover you were looking for? Here are some answers to common questions about this type of insurance.

What should I do if an insurer declines my application?

It is fairly common for insurers to decline an application for critical illness cover, but that doesn’t mean another insurer won’t approve you. It’s important to contact the provider in order to get as much information as possible regarding the reasons for the application being declined.

Rather than try and apply directly with someone else, it is more prudent to contact an adviser like Think Plutus. We can review your circumstances and advise as to which insurers are most likely to consider your application.

When does my cover start?

In most cases, critical illness cover starts as soon as the first premium is collected after underwriting is completed.

Does pregnancy have an impact on critical illness insurance?

If you are already covered by a critical illness policy and become pregnant, your cover will not be affected. If you apply for cover whilst you are already pregnant, many providers will place your application on hold until you give birth since there are certain rare health risks involved in pregnancy and labour. Some providers may still accept your application if a check of your medical records indicate that your pregnancy is healthy and normal.

Think Plutus can discuss with you the insurers who may be willing to accept your application in these circumstances.

What is integrated illness cover?

Integrated illness cover is an add-on to a life insurance policy. It runs concurrently and offers the same level of cover. The insurance will then pay out either upon the diagnosis of one of the critical illnesses defined in the policy or death – whichever comes first.

What is an accelerated life and critical illness cover option?

Some insurance providers offer the option of an accelerated critical illness benefit. It will be added to a standard life insurance policy to pay out in the event that a specific critical illness is diagnosed.

For example, if you took out a life policy with an assured sum of £200,000 and added the accelerated critical illness option for £100,000, you would receive £100,000 upon the diagnosis of one of the listed illnesses. A further £100,000 payment would be released if you were to subsequently die during the term of the policy.

Are employees provided with critical illness cover under the NHS pension scheme?

There are many benefits to the NHS pensions scheme, including life insurance to the sum of 2 years’ salary and a lump sum payment in the event of critical illness. You may also be eligible for early requirement if ill health becomes an issue for you.

For more detailed information about the benefits of the NHS pension scheme, contact Think Plutus and we’ll discuss it with you.

Can my critical illness insurance be cancelled?

Most providers offer critical illness insurance as ‘pure cover’. This means there is no investment element attached and there is no fixed period in which payments have to be made. Consequently, critical illness cover can be cancelled at any time. If you choose to do this, your policy will lapse immediately.

Is critical illness insurance still I’m important if you don’t have a mortgage?

Even if you don’t have a mortgage, being struck down by serious illness or disability can have a huge impact on your finances. Critical illness cover can offer much-needed financial security during an immensely difficult time for you and your family.

For example, the funds can be used to make modifications to your home or to cover other financial commitments like rent, providing crucial support.

Why should I take out critical illness insurance if I don’t have dependants?

Critical illness cover can provide a financial lifeline if a serious illness you are diagnosed with requires extensive medical care. Regardless of your lack of dependants, the financial assistance can make a lengthy period of recovery less stressful and disruptive.

Speak to a critical illness cover expert

Think Plutus are expert advisers in the role of critical illness insurance in a range of different personal circumstances. Get in touch today and arrange a consultation with an adviser to talk through your situation and your needs. We will give you professional insurance advice and help you find the best possible cover for you.

For critical illness insurance advice you can trust, Think Plutus.

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