Critical Illness Insurance: Do You Really Need It?

Which illnesses does the policy cover?

The variety and degree of illnesses covered depend on your chosen provider, how much coverage you pay for and whether your illness qualifies.

Some conditions aren’t considered serious enough for the insurer to release a payment, but if the illness impacts your ability to work, you should be eligible for a payment.

Common illnesses eligible for payments include:

• Heart Attacks

• Invasive Cancers (Depending on the staging and treatment)

• Strokes

• Multiple Sclerosis

• Alzheimer’s

• Traumatic Brain Injury

• Organ Transplants

• Parkinson’s Disease

In general, if you – or a loved one – experience an illness that causes a lasting disability or means you cannot work your critical illness insurance policy should cover it.

However, some illnesses aren’t included in the policy. They include:

• Broken Bones

• Injuries that will heal quickly

• Non-Invasive Cancers

• High Blood Pressure

It can protect your income

Even in two-income families, the effects of having to end employment can be devastating – especially if you rely on income.

A critical illness cover policy can help you and your family financially. For example, if you have a mortgage and other obligations, the benefits you receive might not be enough to cover your losses.

Relieves the financial impact of illness

If you or a loved one becomes critically ill, you might not have enough savings to cover treatment costs and bills. With the right cover, you won’t need to worry about depleting your savings, as the insurance policy will cover some costs.

When you might not need a critical illness insurance policy

Buying critical illness insurance is always a good idea because it gives you peace of mind. However, in some cases, you might not need the policy due to having financial support in place or an illness not impacting your household’s income much.

Do you have a lot of savings?

If you have money through a savings or investment product, you might be financially secure, even without an employment income. Some people prefer to use their savings, but it depends on whether you have a strong enough safety net.

Do you have any other financial commitments?

Financial commitments such as providing for your children, paying a mortgage or loan and credit card repayments require a consistent monthly investment. If you don’t have these obligations, you might not need to get critical illness insurance.

Is your partner able to cover everything?

When it comes to paying household bills and staying in line with your mortgage obligations, two-income households can sometimes still make ends meet without relying on insurance payments.

If your partner can cover all necessary costs, you can avoid making a claim and subsidise your lost income with any available benefits.

Are there any risks?

The insurer might be unwilling to offer you low premiums if you’re at a higher risk of certain critical illnesses. However, this depends on your medical history and whether there’s any evidence that you are predisposed to certain conditions.

Which level of cover do you want?

Insurers have lending criteria in place to determine whether an applicant is a safe option or not. You might only get basic cover if you don’t have a strong financial history or have dealt with other illnesses.

It also depends on how much you’re willing to pay each month, as the best cover will cost more in monthly premiums.

Would an alternative insurance option be better?

Along with critical illness insurance, other policies might be better for your needs. However, this depends on your illness type and whether you meet the eligibility criteria.

Life insurance policy

A life insurance policy provides support for partners and dependants in the event of a death. Some policies offer a tax-free lump sum (unless your loved ones have to pay inheritance tax), while others are known as decreasing policies.

Decreasing cover goes hand in hand with repayment mortgages, and the cover amount reduces over time, in line with your outstanding repayments.

Life cover can benefit some people, but critical illness insurance provides financial support for eligible serious illnesses instead of your loved ones receiving money if you pass away.

Income protection insurance

Income protection cover allows you to recover most of your salary for the time you’re away from work, but deductions are made for any benefits you receive. The good thing about this form of insurance is it covers you up until retirement age if needed.

However, people often choose critical illness coverage because it has much lower monthly premiums that fit the type of coverage you’re getting.

Applying for critical illness cover

With so many types of critical illness insurance available, it’s essential to consider which policy is right for you and whether you’re making the best decision.

The last thing anyone wants is to get stuck paying for insurance that doesn’t help them, so remember to look at the following factors before signing on the dotted line.

Will you need any add-ons?

Some policies include children’s critical illness coverage, while others have it as an add-on. The cover provides financial stability should a child become critically ill.

It’s good in many ways because parents might need to take time off work, but it’s up to you to decide whether the cover is right for your family.

Read the policy documents

It’s easy to skip through terms and agreements, but you should always read the policy documents before signing.

You might get a better deal with another provider, or the terms might not include a diverse range of illnesses, so it’s best to be sure you’re getting a good deal.

Have you been completely honest?

Insurance companies only pay money if you’ve been completely honest about your history. For example, claiming without telling the insurer that you have a terminal illness, they won’t offer any money.

Improve your borrowing options with critical illness cover