How To Choose A Critical Illness Policy

Jane Wardle

Written by Jane Wardle on February 20, 2019

Updated February 20, 2019

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Life is full of unexpected surprises, and while we all hope for the best for ourselves and our families, it is often worth preparing for the worst. Critical illness cover can help to protect your loved ones should something life-changing happen to you, and while it isn’t easy to think about, it is often worthwhile. If you are diagnosed with a critical illness it can leave you unable to work and provide for your family, and critical illness cover offers financial protection should this ever happen to you.

Choosing the right critical illness policy for you and your family can be confusing and will depend on your individual situation such as your financial commitments and existing debts. This guide explains how to choose a critical illness policy, what to consider when choosing your cover, and some top tips to help you make the right decisions for you and your loved ones.

How much critical illness cover do you need?

To begin deciding which critical illness policy is right for you, you should first calculate the level and amount of cover you will need. You can work out what level of critical illness cover you need by:

  • Adding up your debts and expenses: Think about all of your current financial commitments including your mortgage and any other debts. This might include credit cards, personal loans or any other forms of borrowing. Add up all your regular expenses such as utility bills, childcare costs, food shopping and any other monthly expenses.
  • Considering what you have already: Once you know how much your regular debts and expenses are, you can think about what cover you may already have. If you are in employment you may have a benefits package that includes sick pay should you not be able to work due to injury or illness. Also, consider any other income or savings that you might have available to help cover costs should something happen to you.
  • Calculating your cover: You can then take away any cover you might already have from the total expenses that you need to pay, this will leave you with the amount of critical illness cover you require.

When adding up all your debts and expenses, it can be worth adding in a possible lump sum amount for any medical costs or adaptations to your property that might be required should you fall seriously ill.

What type of critical illness policy do you need?

Having a rough idea of the amount of cover you will need is a good place to start when choosing a critical illness policy, and once you have this, you can look into which type of cover is right for you. There are various types of critical illness cover:

  • Critical illness insurance: You can choose a standalone critical illness policy which will pay you a lump sum amount if you are diagnosed with a critical illness that is covered within the policy. Many people choose to take out both a critical illness insurance policy and a life insurance policy. This gives peace of mind that you will be covered should you fall seriously ill, and also your family will be covered in the event of your death.
  • Combined critical illness and life insurance: Instead of purchasing both critical illness insurance and life insurance, you can get just one policy that provides cover for both. These types of policies work by paying out a lump sum if you either die or get a critical illness. Unlike having two policies, with these combined policies you will only receive one payout, so if you claim for a critical illness, then your life insurance policy will end. This option is often more affordable than having two separate policies, but you will only receive one payout.
  • Mortgage protection insurance: Similarly to combined critical illness and life insurance, you can get a type of life insurance policy that is specifically designed to cover your mortgage payments. Within these policies, you can also be covered for critical illness as well as death and will receive a payout that is enough to cover your remaining mortgage costs.

The size of the payout will decrease over time, in line with your outstanding mortgage debt. You will only receive one payout for this policy, so if you claim for critical illness, then your life insurance will end.

Some critical illness policies will allow you to pay a fixed premium every month for the duration of the policy, while other policies will review your premiums every few years and may increase them depending on your age and medical situation.

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