It is not pleasant thinking about the possibility of having a major illness. You have expenses and bills each week including mortgage repayments, energy bills, food and running a car. If you become seriously ill and unable to work, how will you cover the household bills?
Benefits are not enough
If you are unlucky and have a serious illness, then you will be entitled to government benefits. These benefits are set at a very low level and will probably not be enough to maintain your lifestyle.
The biggest debt for many households is the mortgage. Benefits towards mortgage payments are inadequate. In England, the most you are entitled to claim is help towards the interest payments for mortgages up to £200,000, and then there is a 39 waiting period until the first payment.
If you live in Wales or Scotland there are more generous schemes in which the government may buy a share of your house which will reduce the outstanding amount owed on the mortgage.
The solution to protect your lifestyle is critical illness insurance which pays out a lump sum if you are diagnosed with a critical illness. The sum paid out is tax-free.
The amount paid is dependent on the level of cover, but could be around £100,000 or more. The money that is received can be used for any purpose, including the mortgage, medical bills and general household expenses. This money can be a financial lifeline in a time of crisis.
The lump sum received could also be invested to create an income.
What is illnesses are covered?
Each critical illness insurance policy defines what illnesses are covered. Illnesses which are serious but treatable may not be covered. For example, some forms of cancer are excluded because of the high recovery rate. Not all heart attacks may be covered. Mild heart attacks may be excluded.
As long as the illness is severe, the following conditions are usually covered:
Alzheimer’s, meningitis, brain tumour, blindness, advanced forms of cancer, cardiac arrest, coma, CJD, deafness, heart attack, HIV, kidney failure, loss of limbs, organ transplant, multiple sclerosis, Parkinson’s, spinal stroke, traumatic brain injury.
There are other conditions not listed here, and policies vary in the conditions that they cover.
Who is covered?
The policyholder is covered by the policy, but some policies will extend to the children of the policyholder, though payouts for children will generally be less than for adults.
Critical illness cover premium prices vary according to age, whether you smoke and any existing health conditions. Premiums are usually fixed, but some policies have a varied rate that can increase over time.
How to buy critical illness insurance
A broker is the best place to buy critical illness insurance. Ascot Mortgages have access to a wide range of insurance policies. Contact Ascot Mortgages today to discuss your requirements and level of critical illness. We can find the right policy to protect you and your loved ones.