Who Should Take out Critical Illness Insurance?
Help with Financial Difficulties when Unable to Work
Jan 29, 2009
A critical illness insurance policy pays out a tax-free lump sum should the insured ever be diagnosed with a life-threatening illness. With state benefits being of such minimal assistance, a tax-free lump sum can help with mortgage payments, living expenses and help prevent financial difficulties during a trying time for many families.
Who Should Take out Critical Illness Cover?
Whilst a single person doesn't have an immediate need for critical illness cover and life insurance, this isn't the case for everyone. Those that have a financially dependent partner, young children or a mortgage should see critical illness insurance as an absolute necessity. Whilst nobody wants to think about it, a life-threatening illness can strike at any time.
When Does a Critical Illness Insurance Policy Pay Out?
Within 28 days of being diagnosed with a life-threatening illness, a critical illness insurance policy will pay out a tax-free lump sum. Many people make a full recovery from life-threatening illnesses so critical illness insurance should be considered as an additional source of cover to life insurance. Not everyone suffers from an illness before they die.
Never Get a Critical Illness Insurance Policy from a Tied-Agent
Buying critical illness insurance cover from a tied-agent is a mistake that many people make. It seems like a good idea to buy life insurance and critical illness cover when getting a remortgage, but they are generally far more expensive. It is advisable to use an independent brokerage firm or an online comparison service to minimise costs.
Factors Which Determine the Price of Critical Illness Cover
There are certain lifestyle and genetic factors which determine the price of critical illness insurance premiums. Lifestyle factors, such as: age, sex, state of health, weight, occupation and whether someone is a smoker or not will have a huge bearing on insurance premiums.
Critical Illness Cover - Variable Premiums vs. Guaranteed Premiums
Those who wish to take out critical insurance cover will need to decide whether guaranteed or variable premiums are the preferred option. Although variable premiums will be cheaper to start with, it is sensible to opt for guaranteed premiums as it will save money over the entire term.
It is sensible to take out critical insurance cover, especially if someone has a young family or a mortgage to pay. That tax-free lump sum payment can prevent the exacerbation of an already life-threatening illness. How will financial difficulties affect someone struggling with a heart condition?
Those with young families or mortgages should also consider income protection insurance or mortgage insurance in the event of ill health or involuntary redundancy.
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