Critical illness cover gives you the financial security in knowing that you are covered if you have a serious illness. You are paid a tax-free sum if you are diagnosed with a critical illness.

A critical illness often means that you are unable to work for a considerable length of time, and this places a financial burden on you and your family.

The policy length

A critical illness policy will pay out as long as the policy is in force. When taking out a policy, you decide on its length. If you have a mortgage, this is likely to be the main debt you cannot afford to repay if sick. You could decide to make the policy last until the mortgage ends. You could have the policy last until your children have grown up and no longer need supporting financially.

The length the policy lasts, and the amount insured, both affect the policy cost.

Who needs it?

If you have a mortgage, then critical illness cover should enable you to continue paying it. Some mortgage lenders will insist on a policy being purchased before they will approve your mortgage application.

If you have children or other dependants, you may want them to be financially supported if you have a serious illness.

What does a policy pay out?

Many critical illness insurance policies will pay out a fixed sum no matter how serious the illness is. Some will pay a reduced amount if the illness is less severe. The actual amount paid out will depend on how much you are insured for.

To calculate how much insurance you need, you need to total all your household expenses, including mortgage payments, energy bills, debts and living expenses. In case a critical illness means that you will not be able to work again, multiply your yearly expenses by the number of years that you expect to live. Obviously, no one knows exactly how long they’re going to live, so a positive estimate is a good idea.

What is covered?

There is no one answer to what illnesses are covered, as policies vary. Conditions such as organ transplants, Parkinson’s disease, meningitis, deafness and traumatic head injury are amongst the conditions covered.

Some policies will also cover you for the loss of a limb. Many will exclude what are classified as self-inflicted illnesses, including conditions arising from alcohol, drug abuse or self-inflicted injuries.

You will need to report details to your insurer about your medical history, as any existing conditions may not be covered.

Are there any alternatives?

Income protection insurance will cover you if you temporarily lose your job through illness or injury. Mortgage protection insurance can make sure that you keep up with the mortgage payments if you are sick or have an accident, while life insurance means you’re your dependants can be helped financially if you die.

Where can I buy critical illness insurance?

Talk to Ascot Mortgages about your insurance needs. We can find the best critical illness policy to suit your circumstance.