Critical Illness Insurance - frequently asked questions
Posted on 17th April 2023
If you receive a diagnosis for a serious condition or disability critical illness insurance could provide a reassuring lump sum payment. It will support your finances while you adjust to your condition.
Here are answers to some of the most frequently asked questions about this type of insurance from the Vida Insurance team.
Q: What is critical insurance cover?
A: If you receive a diagnosis for a serious medical condition critical illness insurance could provide a tax-free lump sum. It will help you manage your finances, pay for private medical treatment, or adapt your home to meet your changing needs.
Q: What is a critical illness?
A: Critical illnesses affect the way you live in the long term. There isn’t a single definition, so it’s important to read your insurance proposal carefully before you decide to take out this type of insurance.
A policy normally includes cancer, major organ failure, limb amputations or paralysis, permanent loss of your sight, hearing or speech. It should also cover degenerative illnesses such as Alzheimer’s, Parkinson’s or multiple sclerosis (MS).
Q: Are some conditions excluded from critical illness insurance?
A: One of the key considerations is whether your condition will permanently affect your life. Insurers might define this in different ways and some exclusions could apply. Some insurers also have a maximum age limit or duration for critical illness insurance.
The severity of your condition could affect your payment. So, for example, low-risk early-stage or treatable cancers might not qualify for a payment. Exclusions are also likely to apply to pre-existing conditions. To receive payment, your diagnosis must be given by a specialist consultant.
Q: How do I decide if I need critical illness cover?
A: If you have concerns about the financial implications of a long-term illness then it’s worth finding out more. If you’re currently healthy now is a good time to take out a policy because pre-existing conditions are usually excluded.
As an employee your remuneration package might include cover for serious illness, so it’s worth checking. However, employee benefit packages are often time limited. If you’re self-employed critical illness insurance could provide financial security while you work out how to live with your diagnosis.
A lump sum payment could be helpful if your family relies on your income. If you have a mortgage or other debts it could reduce or fully pay what you owe.
Q: What can I use a critical illness insurance lump payment sum for?
You can decide how to use your lump sum payment according to your priorities. If you are unable to go to work, you could use some of the money to pay extra household bills because you’re spending more time at home. You might also need to adapt your home so that you can live more comfortably.
Your lump sum might not completely pay your mortgage, but it could cover your payments while you decide on your next steps. It could also support other people who depend on your current income if you’re no longer able to work.
If your illness is sudden you might choose to spend some of your lump sum on private medical treatment. This can help to stabilise your condition so that you can make better informed decisions for the future.
Please get in touch if you would like to know more about critical illness insurance.
Vida Insurance Advisors is a trading style of N and J Health & Protection Ltd, an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales no. 12657007. Registered Address: 23 Russell Avenue, Bedford, Bedfordshire, United Kingdom, MK40 3TD.
Tagged as: Critical Illness Insurance
Share this post: