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  • Writer's pictureJonathan Norcutt

Critical Illness Cover Explained: Protect Your Livelihood

Thursday 18th April 2024

(information contained within was correct at the time of publication but is subject to change)

Patient hand being held in a loving embrace

Are you someone who likes to always have a plan in place? Even if an individual isn’t as plan-oriented as others, it’s safe to assume we all plan for the future as best as we can. However, life is, if anything, unpredictable. You never truly know what’s waiting around the corner. A critical illness is one of the things that could strike at any time, making critical illness cover a vital lifeline to many. 

In this article, our insurance protection advisors aim to provide you with a clearer understanding of critical illness cover. We will explore what this insurance policy is, how it works, who it is for, and the standard terms of coverage.

What is Critical Illness Cover?

In the event of being diagnosed with a critical illness, someone with critical illness coverage could be supported with a lump sum payment to assist them with the financial burden that comes with becoming critically ill. Such a situation can turn a family’s life upside down and lead to financial stress, but critical illness cover could help relieve some of the pressure and protect a person’s livelihood following the diagnosis of a critical illness. 

This type of cover is different to income protection as instead of making regular payments for a defined period of time, critical illness cover pays out one lump sum. This money provides a financial buffer to help manage your circumstances associated with suffering a critical illness. The money could be used for anything, for example, childcare costs, changes to your home, or to maintain your standard of living should you become unable to work. 

How Critical Illness Cover Works 

A critical illness payout could help you in so many ways if you were diagnosed as critically ill. The financial support you receive could be used to help pay off your mortgage and household bills or unexpected treatment costs. But how does it work?

Relieved older man covered by critical illness cover sat with male doctor

Critical illness coverage typically involves these principles:

  • Regular Premiums – To enable and keep coverage, you will pay regular premiums to your chosen insurance provider. The monthly cost will vary depending on your level of cover (the lump sum amount) and such factors as your age, health and lifestyle. 

  • Conditions Covered – We will discuss what conditions are typically covered later in this article, but different providers will only provide coverage for their list of accepted critical illnesses. It’s important to understand what conditions are covered and what are not. 

  • Term of Coverage – Like other insurance policies, critical illness cover comes with a policy term. Terms are set at your discretion but will be subject to a provider’s minimum and maximum term lengths. 

  • Payout – If you are diagnosed with a covered critical illness, meet the policy’s criteria, and are diagnosed during your policy term, you can be paid a tax-free lump sum of money by your provider. 

Who Needs Critical Illness Cover?

Indeed anyone can be diagnosed with a critical illness at any time, however, the main individuals who may benefit greatly from this type of insurance include:

  • Employees – Most employees rely on their income for their livelihood and if they are unable to work, this can lead to great financial hardship. Plus, their income alone may not be enough to keep up financially with the costs associated with being critically ill. 

  • Self-Employed Individuals – While employed workers may benefit from employer sick pay in the event of being diagnosed as critically ill, the same cannot be said for self-employed workers. Critical illness coverage could provide a safety net if they are unable to work or cover associated costs. 

  • Primary Earners – Someone who is the primary earner in a household is responsible for the financial well-being of their dependents. Coverage can help families stay afloat should the primary earner become critically ill. 

  • Those With Mortgages – Critical illnesses can make it difficult for individuals to maintain mortgage payments. But with coverage, the money could be used to contribute to or pay off a mortgage. 

Critical Illness Coverage Options

When it comes to critical illness coverage, there are varying aspects to consider and different options to choose from, allowing you to tailor a policy to suit your individual needs and situation. 

Below are the key elements that typically make up critical illness cover and each should be carefully considered before choosing a provider. 

Critically ill woman suffering from cancer sat in a hospital chair

  • Cover Amount – You are paying monthly premiums to access a lump sum of money in the event of becoming critically ill. This level of cover must be decided by you and should be calculated to provide sufficient financial support during this difficult time. 

  • What is Covered – If there is a condition you are particularly concerned by – perhaps because of family history or a pre-existing medical condition – you want to be sure the policy you choose covers this condition. Typical conditions covered include most types of cancer, heart attack, stroke, blindness, Alzheimer’s, deafness, liver failure, and multiple sclerosis.

  • What is not Covered – Along with understanding what illnesses are covered, you must consider what illnesses are not covered. Again, this will vary between providers. 

  • Term of Cover – The policy term you choose is vital and should align with your circumstances and financial needs. 

How a Protection Brokerage Could Help 

Seeking professional advice if you’re considering critical illness cover could be an incredible asset to you. As you now know, critical illness cover is an insurance policy that greatly depends on the individual – their unique needs, financial situation and lifestyle. 

Middle aged man discussing critical illness cover with protection advisor

At Norcutt Mortgages, our team of protection advisors can aid you in navigating the landscape of critical illness coverage. By understanding your needs and situation, they can help you compare different policies to find the one that aligns with you and your family’s needs. Remember, this is a long-term financial commitment which makes choosing the right policy and level of coverage at premiums you can afford crucial. With the right assistance and plan in place, critical illness cover can be an invaluable safety net that allows you to focus on your recovery and well-being while the financial side of things is covered. 

Speak to an advisor today to start protecting your future with critical illness coverage. 


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