Critical illness

What would you do if you or your partner were one of those “statistics” and was no longer able to work full-time, or had another serious illness that meant you had to adapt your home and car?

critical illness

This is when critical illness insurance comes into its own. It provides a tax-free lump sum payment on diagnosis of a ‘qualifying’ serious illness.

 

The lump sum can be used to modify your home or vehicle, pay off the mortgage or generate an ongoing income providing you and your family with a continuing level of financial security.

Every two minutes someone in the UK is diagnosed with cancer.

Cancer Research UK 2016 claims.

Critical illness insurance is a complex product with exclusions and pay-outs varying greatly from insurer to insurer. Typically all insurers cover illnesses such as cancer, heart attack, stroke, Alzheimer’s and multiple sclerosis. A comprehensive policy can cover you for over 170 ‘qualifying’ illnesses – a typical one has less than 50 – so it pays to talk to an adviser to ensure you get the best policy for your budget and health concerns.

 

With the ability to lock in the cost of your monthly premium (guaranteed premiums) when you sign up it’s worth noting that premiums are less when you’re younger, as you’re less of a risk. So it’s a very good idea to anticipate your longer term need for critical illness insurance and buy it as early in your life as possible.

 

As an example, if you are 30, a non-smoker and in good health, then a premium of around £63 per month would provide you a lump sum amount of £175,000 upon your premature death or diagnosis of a critical illness before the state retirement age of 68. Actual premiums will depend on underwriting. (Source: iPipeline July 2018).

Which option is best for you?

Roxburgh Financial Management was set up to provide specialist help to people unsure how to go about choosing from the many protection products available. For example, you might not be insured for certain illnesses if the diagnosis is made after you reach a certain age, most policies pay out only once but some will make a small payment if you are diagnosed with a less severe illness, and some insurers cover your children at no extra cost whilst others may not. So it’s important to make sure that if you’re buying a policy that it’s the right one for you.

Our specialists will help you to navigate all the options to find the cover that is right for you and your family at an affordable rate.

If you’re unsure what you need then contact us by phone on 0345 434 9505, or email Enquiries.Roxburgh@sjpp.co.ukor by clicking here

Five reasons to use us

1. We offer insurance advice with no obligation

2. We will explain the good, the bad, and the ugly

3. We will ask the right questions

4. We do all the work, right through to helping complete the application form

5. We can access a comprehensive range of insurance providers

  • Types of critical illness insurance

    Level Term critical illness insurance

    With Level Term critical illness insurance an insurer is paid a monthly amount (the premium) to ensure that an ‘agreed amount’ (the benefit) is paid to the insured should they be diagnosed with a serious illness within the agreed number of years that the insurance is in place, called the Term.

    Level Term critical illness insurance is commonly taken out to provide a guaranteed lump sum amount with guaranteed premiums.

    Decreasing Term Critical Illness Insurance

    With Decreasing Term critical illness insurance an ‘agreed amount’ (benefit) is chosen which reduces over time. An insurer is paid a monthly amount (the premium) to ensure that the ‘decreasing amount’ is paid to the insured should they be diagnosed with a serious illness within the agreed number of years that the insurance is in place, called the Term.

    The amount you pay is fixed throughout the life of the insurance (policy), and the premium level is lower than that of Level Term critical illness insurance as a result of the decreasing benefit.

    Decreasing Term critical illness insurance is commonly used to pay off a repayment mortgage, taken out for the same number of years as the mortgage and reducing in line with the outstanding mortgage amount. The benefit should reduce slower than the mortgage debt, ensuring repayment of the mortgage in full. However, there is no guarantee that the level of cover will match the outstanding debt upon a claim.

    Increasing Term critical illness insurance

    With Increasing Term critical illness insurance an ‘agreed amount’ (benefit) is chosen which increases over time. An insurer is paid a monthly amount (the premium) to ensure that the ‘increasing amount’ is paid to the insured should they be diagnosed with a serious illness within the agreed number of years that the insurance is in place, called the Term.

    The ‘agreed amount’ will rise each year by an agreed rate, normally Retail Price Index (RPI) or the Consumer Price Index (CPI). This is called Indexation. As your cover increases so does your premium.

    The benefit of selecting indexation is you are protecting the purchasing power of your selected benefit because as time goes by, it’s expected that the cost of living will go up – it’s what’s known as inflation.

    Critical Illness with life insurance

    Most life insurance policies have the option of including cover should you be diagnosed with a critical illness. Where life insurance only pays out on a premature death, a life and critical illness policy also pays out the sum assured should you be diagnosed with a number of serious illnesses as defined by the insurer’s terms.

    A combined life insurance with critical illness policy would usually pay out on the first event of either death or diagnosis of a serious illness. This type of cover is normally taken out together because the price of a standalone critical illness policy is often exactly the same as a life policy with critical illness cover. This is due to certain insurer tax advantages available for life insurance and the fact that there is much higher chance of suffering a critical illness before death.

    It’s also possible to take out a policy that pays on diagnosis of a critical illness and death.

     

    If you’re unsure what you need then contact us either by phone on 0345 434 9505, or email Enquiries.Roxburgh@sjpp.co.uk, or use the contact me option by clicking here

     

  • Critical illness insurance options

    As with all things, the more options you choose the higher the price. Critical illness insurance is no different and different insurers load the options differently. It is therefore important to determine what you need and what you would like so we can find the best income protection policy available to you in the market place. Below are some of those options.

    Guaranteed or reviewable

    With guaranteed premium policies, the basic premium you pay stays the same throughout the policy term unless you increase the required income amount (or if you have indexation).

    A plan with reviewable premiums is reviewed by the provider each year (like home insurance) and a new set of terms are then issued for the next 12 months. There may be no change. But, the provider can change the premium.

    Level or indexed

    ‘Level’ means that the amount you receive will remain the same throughout the time you have the insurance, regardless of whether your income or expenditure increases. Alternatively, the amount you receive can increase each year in line with inflation, using either the Retail Price Index (RPI) or the Consumer Price Index (CPI).

    Waiver of premium

    If ‘waiver of premium’ is selected then, when you begin receiving an income from the insurance policy, the premiums paid will be refunded back to you until the claim finishes.
    Most ASU plans do not offer a waiver of premium option, meaning you must pay for the plan whether in claim or not.

    Survival period

    Most policies require you to survive for a specified period following diagnosis of a critical illness which can range from ten days to three months.

    Permanent total disability

    This option allows you to claim if an illness or accident leaves you unable to work. Some policies define permanent total disability as being unable to perform any job; whilst others define it as being unable to continue in your previous occupation.

    Single pay-out

    Most policies pay out only once. However, a number of insurers will make a small payment if you are diagnosed with a less serious illness. The policy continues, allowing a further claim if you were diagnosed with a further serious illness.

    Cover Increase option

    There is often an option to change cover without further medical information if your circumstances change often due to a significant life event. Providers options vary but some examples are: marriage, divorce, increased mortgage amount, birth or adoption of a child, and salary increase.

    With Life Insurance

    A combined life insurance with critical illness policy would usually pay out on the first event of either death or diagnosis of a serious illness. This type of cover is normally taken out together because the price of a standalone critical illness policy is often exactly the same as a life policy with critical illness cover. This is due to certain insurer tax advantages available for life insurance and the fact that there is much higher chance of suffering a critical illness than dying. It’s also possible to take out a policy that pays on diagnosis of a critical illness and on death.

    Children’s benefit

    Some policies include cover for any natural, adopted or step children as part of their standard definitions. This benefit will pay out an additional lump sum if any of your children are diagnosed with a critical illness or to lose their life during the policy term.

    Child accident hospitalisation cover

    This is a special payment is made if a natural, adopted or step child is admitted to hospital due to physical injuries for a specified minimum number of consecutive days, immediately following an accident.

    Childcare benefit

    A special payment paid alongside a claim for critical illness where the insured person has a natural child, legally adopted child or step-child under five years old.

     

    If you’re unsure what you need then contact us by phone on 0345 434 9505, or email Enquiries.Roxburgh@sjpp.co.ukor by clicking here

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