Considerations for the future: Critical Illness Cover
It may seem far removed from your student life – and hopefully it is far removed – but illness (or at least death) lies somewhere down the road for us all. If you have perhaps been looking at the options open for taking on a mortgage, you may well have come across the fact that a life assurance policy is a mandatory condition for many mortgages. Life assurance generally covers the mortgage payments in the event of death, sometimes with the addition of leaving some cash for a beneficiary. However, the statistics associated with this necessarily morbid issue are perhaps surprising; while many people take out life assurance, you are actually five times more likely to need a different type of policy altogether, before retirement age; and that is critical illness cover.
Critical Illness Cover is a type of insurance policy designed to pay out in the event that you contract or develop one of the critical illnesses specified in the policy. As the name suggests, the conditions covered are a bit more serious than a bout of the sniffles; we’re talking about heart attacks, strokes and cancers. Unfortunately, the health implications of serious illness can often reach beyond your immediate physical health; critical illness usually means a prolonged period of absence from work, or even early retirement – both of which can mean a severe drop in income. A drop in income when you are in poor health can be a major cause of stress in itself, which of course will not help with your recovery. The money from critical illness cover should provide a financial cushion to enable proper time to recuperate, without having to worry about rushing back to work before you are fully fit. Commonly, the sum insured by critical illness cover when you take the policy out will be the remaining balance due on your mortgage. Unlike life assurance, you don’t have to die to receive the money, and therefore should not need to face the stressful prospect of losing your home as a result of defaulting on mortgage payments while you are recuperating from serious illness.
Critical illness Cover, like any insurance policy, is the sum of the detail. There are commonly around thirty conditions included in the average critical illness cover policy, but each is different – and so you must ensure that you research these conditions thoroughly, especially if you have an underlying health condition. There are usually exceptions to the cover, such as certain types of cancer – and lifestyle issues like smoking and drinking can void the policy if you do not make an honest declaration when taking out critical illness cover. Since a critical illness cover policy is usually only triggered by the diagnosis of one of the conditions specified in the contract by an approved specialist, it is important to give full disclosure of lifestyle and medical background, as these points will be investigated in detail. You can get an introduction to, and overview of critical illness cover by looking at the website of one of the big providers such as Legal & General.
