Should Critical Illness Cover Be A Critical Part Of Your Financial Planning?
Critical illness is up there with one of the most important issues in life that people just don't like or want to talk about. Now, at the risk of sounding depressing, have you ever thought about how you were to financially cope if you fell too ill to work? Could your family cope? Perhaps this New Year should encourage you to kick start some financial planning and preparation for just such a scenario why not get some professional life insurance advice and even a life insurance quote or two. Don't take a macabre view on the process, see it as an investment, should (being the imperative word here) anything happen to you.
Recent statistics released by the Association of British Insurers suggest that Brit's pay an annual average of 919 on Life Insurance. This is a surprisingly high amount considering so many of these individuals have no form of critical illness cover. Most Life Insurance policies will have the option to add additional critical illness cover onto your policy. This then ensures that you and your family are provided for should you fall too ill to work. Don't buy into life cover blindly, read the small print. Most will not pay out if you become too ill to work, and instead pay out after you have passed away. This is certainly of no use if you are battling with a critical illness for years.
As with most products offered by financial services lenders, critical illness policies will not protect you against every possible effect of varying conditions. While you will be covered against the more common life changing illnesses, full coverage cannot be guaranteed. To deal with this level of uncertainty, it is best to obtain financial advice in order to find the most suitable policy for you.
While policies surrounding health insurance are sometimes a little complex and complicated, the long term benefits are astounding. We are more than happy to protect our loved ones should we pass away, but why should we compromise their future in the more likely eventuality of falling ill with critical illness. The initial paperwork and research is surely worth the financial security of your family? So, here are just a few bits of advice to help you on your way to obtaining critical illness cover.
Just 25 per cent of the British public who have life insurance, according to prudential, buy on price alone. But even if the person applying for a policy is astute, according to fellow insurer Scottish Provident, the UK as a whole, isn't. A recent study by the provider found that six Britons in ten have no protection, with just 35 per cent taking out life cover, and only 13 per cent opting for a policy that pays in the event of a critical illness. These are uncomfortable statistics to read when you consider how much debt must therefore exist without any protection.
The FSA blames a lack in the availability of information on health insurance for these low statistics. However, following their report in 2006, there has been a surge in information and advice for the consumer, particularly online. Therefore, if you, like many, are unsure as to where to begin with a critical illness policy, then do a bit of research online.
So, the basics are that Critical Illness is insurance for ill health, which usually entitles the holder to a lump-sum payment should they be diagnosed with a serious condition. A caveat is regularly put on this, specifying the individual must survive for a period of time following diagnosis, in order for payment to be issued. This is often 14 days. Heart disease, strokes, cancers, Parkinson's, Alzheimer's and kidney failure are commonly covered. One in three Britons are likely to develop cancer in their lifetime. And then heart disease remains one of the UK's biggest killers. Looking at it from this view, it seems as if the average policy will safeguard people pretty well against the big nasties.
However, there are some other illnesses that are not covered in such policies. Take Diabetes for example. Most individuals with diabetes can continue to live a fairly normal life for years following diagnosis, and so lenders do not include the illness as part of their policy. Yet diabetes is linked to various other illnesses which, as a result, are not insurable either. An example of which is nerve damage. Nerve damage as a result of diabetes can result in the loss of extremities, such as hands or feet, but cannot be insured. However, if a person was to lose their hands or feet by any other means that would be completely insurable. This is a shocking piece of information, especially as diabetes is the 5th most common cause of death in the UK.
While this may seem an unfair system, the financial services do have to draw a line somewhere. And as I'm sure this will frustrate many people within the UK, diabetes is just one example in a long list of those that do not actually qualify for insurance cover. But should this stop you from obtaining critical illness cover? At the end of the day, it depends entirely on your personal circumstance. If you already have stand alone life insurance in place, then surely it would make sense to add the critical illness feature? Or, if you have neither of these, perhaps 2011 should be the year where you at least look into the process?
Of course no one can predict the future; we don't know when we're going to fall ill, or how it will affect our lifestyle. For this reason there is no such thing as a comprehensive policy when it comes to health insurance. Although, researching your family's medical history and gathering together information on your lifestyle such as habits, diet, exercise and previous illness can really help determine the best policy for you. So returning to the original question, how critical is critical illness cover? It is certainly something to seriously consider. While it is complex and sometimes complicated, you'll be thanking yourself should anything happen which inhibits you from working.
Debi writes for Just Life Insurance the UK's No1 site for life insurance advice, and market leading life insurance quotes.
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