When you start comparing critical illness policies you will quickly notice that there is a great deal to take into account. First and foremost, you need to examine the advantages and disadvantages this type of insurance has. Different insurers offer different terms, conditions and payouts, so you need to ensure you have a clear picture of what each policy has to offer and whether critical illness cover is something that might be useful to you.

Think Plutus wants you to make an informed decision about critical illness insurance so we’ve created this guide to talk you through it. As always, if you would like bespoke advice from an insurance expert, you can contact us any time and we’ll have a chat.

Advantages and disadvantages of critical illness cover

Many people are not financially comfortable enough to keep up with their outgoings when they don’t have a regular income. The purpose of critical illness cover is to provide financial protection in the form of a lump sum payout in the event that you are diagnosed with a condition, illness or injury that renders you unable to work. Critical illness cover has provided a lifeline for countless people who have found themselves unable to work due to illness or injury.

This safety net can provide enormous peace of mind for the policyholder, who will feel confident that they will be able to pay their mortgage bills and other outgoings if they are incapacitated. Dealing with the reality of a serious illness or injury is hard enough without the stress of struggling to keep up with your financial commitments in the absence of your normal income.

Before taking out any insurance policy you must consider all the variables very carefully to ensure you settle on the right plan. The help of a critical illness insurance expert can help outline the pros and cons of each policy, but we’ll give you a general overview here.

The benefits of critical illness cover

If you were stricken by illness or injury that made you unable to work, critical illness insurance could kick in to help.

Spend the payout however you like

The core benefit of your policy will be that it provides you with a lump sum that you can use however you see fit. Paying off bills and supporting your loved ones financially are the obvious options, but it could be that you use the money to take a well-deserved holiday with the family.

Use the money to generate more income

Though you would hope that the need to make a claim never arises, if you are forced to, it could be an opportunity to designate a portion of the funds for investment. After your outgoings are paid, you may want to invest to raise money to support your children in the future, for example.

The payout rate is high

According to data from the Association of British Insurers, £4.7 billion was paid as some form of protection insurance to UK claimants in 2016. The payout rate was an impressive 92.2% on no less than 15,464 claims.

Before you commit to signing a critical illness cover policy, check the provider’s rate of payout (you should be able to find this information on their website). If you are unable to find it, contact Think Plutus and we will source this information for you, along with other policies you wish to compare it with.

You could get critical illness cover for your children

Some insurers also offer children’s critical illness cover bundled with your own. This can be a great help if you need to take a significant amount of time off work to care for a child. Bear in mind, however, that the payout can be lower, but with this cover thrown in for free with your own, you can’t complain!

If you would like to discuss with an expert whether critical illness cover would be a good option for you, contact Think Plutus today.

The disadvantages of critical illness cover

With critical illness cover in place, you get an assurance that you will be financially covered if you become unable to work. You should be aware that there are some things to be aware of that could make some policies less suitable for you.

Policies won’t necessarily cover every condition or illness

Unfortunately, the list of conditions/illnesses a policy will pay out for is limited. The conditions covered vary between lenders, though some will offer optional conditions that you can include in the policy. With this in mind, you must check the terms and conditions thoroughly before putting pen to paper on a contract. Some experts will advise you to take out income protection in addition to critical illness cover to ensure you are covered no matter what stops you from being able to work.

If the conditions covered is not immediately clear when you read the agreement, as the policy provider to give you a full list of what the policy covers you for. It may also be a good idea to have the contract examined by an insurance adviser as they will be able to highlight important details and, crucially, absences.

The amount of cover and price of premiums can vary

The rates offered by different insurance providers always varies in accordance with your circumstances. This can have an impact on the amount of cover you are offered. Your health, age and lifestyle can significantly impact your ability to take out critical illness insurance.

You should expect to be asked personal questions about your lifestyle during the application process, which can seem intrusive. Rest assured, however, that it is necessary to ensure you get accurate cover. Before applying, some people try to improve their general health to try and secure the lowest monthly premiums. This can work, but you must always provide accurate information in your application since being dishonest can result in claims being refused.

There is a limit to the number of claims you can make

You should know that most insurers will only pay out for one claim on a critical illness insurance plan. This means that, if you make a claim and receive your payout, you may no longer be able to claim again, even if you were to die. This is one area where an insurance adviser can help – their knowledge and expertise can be invaluable in sourcing an insurance provider that will pay out more than once.

There are even some critical illness protection insurers that pay out smaller sums after having previously released a full payout for a claim. Speak to one of the experts at Think Plutus to learn about the insurance providers that offer this option.

It can be expensive

It is a sad truth that some critical illness cover providers charge excessive premiums for their policies. This means it is important to find the ones that offer a fair level of cover at an affordable cost. The key to finding the deals that are not over-charging is to compare quotes from a range of providers. Not all policies are created equal, and the cover provided as well as gifts/add-ons can vary greatly.

An insurance adviser can perform a thorough search of the market on your behalf, saving you a lot of time and stress. With their industry expertise, they will already have a pretty strong idea of the insurance providers that will be best for you. Speak to Think Plutus to get your search off on the right foot towards finding the right deal.

Speak to an insurance expert

Contact Think Plutus and one of our critical illness specialists will be able to offer impartial advice in a free, no-obligation consultation. We will walk you through the advantages and disadvantages of different critical illness policies and help you identify the best one for your needs.

For critical illness insurance advice you can depend on, Think Plutus.

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YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.

We do not charge a fee for our advice, instead we charge for arranging your mortgage. Our typical fee is £495 depending on your personal needs and circumstances. For insurance business we arrange policies from a panel representative of the whole of the market. Think Plutus® is a trading name of The Finance Planning Group Limited. The Finance Planning Group Limited is authorised and regulated by the Financial Conduct Authority (FCA). Registered in England No. 3894404. Registered office: Hurstwood Grange, Hurstwood Lane, Haywards Heath, West Sussex RH17 7QX. The FCA does not regulate most buy to let mortgages.