Critical Illness is a type of insurance that should pay out a lump sum if you are diagnosed with a life threatening illness such a cancer or heart disease. The money that is paid out is tax free and can be used in any way that you wish, for example, paying off a mortgage, enabling to you to stop working or pay for your medical expenses.
Most people think ‘it will never happen to be’ but some statistics from the Insurer Friends Life suggest otherwise:
- Every two minutes someone in the UK is diagnosed with cancer.
- More than 1 in 3 people in the UK will develop some form of cancer during their lifetime.
- Every year over 150,000 people in the UK have a stroke.
- There are around 103,000 heart attacks in the UK each year, one every 5 minutes.
Critical Illness cover is generally added to life insurance, but it can be taken out on its own. The cost of cover will depend on the individual and their health/lifestyle, for example, a smoker’s premium will cost more than a non-smokers. A lot of people consider Life Insurance and/or Critical Illness cover important only if they have a mortgage or dependents, however this is not necessarily the case. Each individual’s protection needs are different depending on their circumstances.
Naomi is a single 24 year old who decided to take out a Critical Illness cover only (no life insurance included). She was approached by a broker and after a discussion she realised this was something she should consider. She lived alone and had financial responsibilities including rent, bills and a bank loan. Naomi realised that if she developed a critical illness and she was not able to work then she would be in real financial difficulty as she only had a limited amount in savings.
Naomi decided to take out a £50,000 Critical Illness policy. She is a 24 year old, average weight, smoker and the policy cost her £21.32 per month. “A small price to pay for the peace of mind that if something happens to me I will be covered for this large lump sum.”
For more information or a free non obligatory discussion on your protection needs, get in touch with J2M Financial Solutions.