Have you ever thought about how you’d cope financially if someone in your household became critically ill? Probably not. Most of us don’t like to think about us or our loved ones getting ill – which is understandable.
The problem is a critical diagnosis in your household can have significant financial consequences. It’s something we should try to think about before anything happens. Most of us would need some level of financial support. It can help counter the loss of income an illness could bring. It could help us cope with our new illness and simply to give us some respite too.
This is particularly the case if you have a family because families rely on each other financially, whether it’s to maintain your lifestyle, pay the bills or, literally keep a roof over your heads. A critical diagnosis in most households would pose a risk to financial security. It’s something you should definitely consider protecting yourself against if you have a family.
A quick guide to critical illness cover
Critical illness cover is the kind of insurance that can help protect your family against the financial impact of a diagnosis. If you get cover, you’ll get paid a lump sum of money if you’re diagnosed with one of the illnesses listed in your policy. For adults, this usually includes things like cancer, heart attacks, strokes, loss of limbs, hearing or sight, Alzheimer’s, Parkinson’s, and so on.
Most critical illness policies cover you for a list of severe illnesses (the core policy benefit) and a list of less severe illnesses (an additional policy benefit). This is important to know because the insurance pays out differently for both kinds.
Core benefit illnesses:
If you get one of these, you’ll receive the full lump sum and your policy will end (so you’ll no longer be insured).
Additional benefit illnesses:
If you get one of these, you’ll receive a % of your lump sum, and your policy will continue (so you’ll be able to claim again in the future, for another additional illness, or for a core benefit illness).
This kind of cover is designed to protect you against the financial consequences of a diagnosis by giving you a financial cushion. Whether or not you need this cushion, and how big it needs to be, depends on your personal and financial circumstances. Here is a couple of scenarios when it could come in very handy.
If a breadwinner in the household becomes critically ill
If someone who brings money into the house whether that’s you or your partner, or both suddenly can’t work because of a critical diagnosis, most people would run into financial difficulties fairly quickly. After all, your sick pay and savings (if you have them) can only last so long. A diagnosis can often bring other financial demands too. Medical bills, travelling to hospital appointments, or needing to make household alterations can occur.
Could you keep up with the cost of life and cover these extra outgoings without financial support? If not, critical illness cover could really help. It would pay out a lump sum as soon as you’re diagnosed, so you can concentrate on getting better or adjusting to your new condition without money worries.
If a child in the household becomes critically ill
Similarly, having a child who becomes critically ill can have a knock-on effect on the household’s finances. It usually means a breadwinner in the household needing to take time off work. The good news is that many critical illness policies cover your children too, at no added cost! So if you’ve got children, it’s definitely worth adding them to your policy.
Children will be covered for the same illnesses as adults, and sometimes some child-specific illnesses such as type 1 diabetes, cerebral palsy, cystic fibrosis and Down’s syndrome. If your child is diagnosed with one the listed illnesses, the cover will pay out in the same way as the additional benefit (adult) illnesses mentioned above – i.e. it’ll pay out a % of your lump sum, after which your policy will stay in place and you’ll still be insured.
Summary: When to buy critical illness cover
If you’ve a family, it’s a good idea to get some critical illness cover in place as soon as possible. This is so that your family wouldn’t face financial struggles if someone in the household received an unfortunate diagnosis. It could happen to anyone, as difficult as it might be to think about. This guide will help you work out what the best critical illness cover might be for you. It’s worth noting that a lot of people choose to buy critical illness cover at the same time as life insurance. Most insurers offer combined policies so they’re covered if the worst happens, either way.