Author Richard T Lishman, Managing Director of money4dentists, a firm of specialist Independent Financial Advisers who help dentists across the UK manage their money and achieve their financial and lifestyle goals.
Today, as many as one million people in the UK are thought to suffer from a critical illness, or a condition that prevents them from working. In a time where financial stability is not guaranteed, thanks to rising prices and threats of government cuts, the thought of being hit by a debilitating illness can hang over us like a dark cloud. However, there is a silver lining – critical illness protection.
Designed to pay out a single, tax-free lump sum if you are suddenly diagnosed with a serious condition, critical illness protection can offer a degree of safety and reassurance in a time of uncertainty. Whether that's paying off your mortgage, setting up a fund for dependants or using it as a replacement for lost income, the money can be used in any way that suits you.
Because in the past these policies received criticism regarding their pay out rates, there have been positive changes made to critical illness in recent years – changes that could make a difference to your life should you fall victim to sickness. For instance, companies are now required to declare what percentage of claims are paid out each year to policyholders. With statistics from the Association of British Insurers showing that 92 per cent of critical illness claims were paid out in 2015, it is evident that this form of protection is, for the most part, a practical and infallible way of protecting yourself and loved ones from potential financial ruin.
There has been an increase in the number of illnesses and conditions that can be claimed for too, with most policies now covering a range of common ailments. These can include:
Certain types and stages of cancer
Most companies also now offer extended cover to include permanent disabilities as a result of injury or illness. Depending on the type of policy that you have taken out, you could even be protected against losing a limb, digit or eye.
It is important to note, however, that there are some conditions that are not covered within critical illness protection, including those where you are expected to die within 12 months of diagnosis. Other factors such as pre-existing health problems, age and lifestyle can also affect your policy and the pay out that you are eligible to receive. Consequently, it is always wise to examine policies carefully and thoroughly when reflecting on the various products that are available.
The other main factor to which you should give thought to when choosing a policy is cost. Though the monthly payment that you are required to pay is based on your age, current health, weight, occupation and family medical history, prices can vary between insurance companies. Thus, it is always best to find a policy that is best suited to you and your needs.
Once you've found a policy, it is crucial that you are both meticulous when filling out the application and alert as to what it does and does not cover. Indeed, two of the most common reasons why claims are declined are that they don't meet the policy agreement and/or the policyholder has withheld relevant details about a previous medical problem.
For the most part, however, claims are successful. In fact, last year, insurers paid out £9.4 million every day for protection policies such as critical illness, which makes the UK the third largest insurance industry in the world and the largest in the European Union.ii Thanks to such products, common conditions such as cancer – which amounted to 65 per cent of all claims made in 2015 to a major UK company – don't have to cause financial burden to those who don't have savings to cover time off work.
If you do have enough savings to fall back on to cover expenses such as bills, loans, medical costs, mortgage payments and have enough to support yourself and your family, then you may not need critical illness cover. However, circumstances can change. Like in the same way that becoming ill cannot be anticipated, you never know what's round the corner. Plus, even if you have an employee benefits package to cover long-term sickness, it might not be enough to cover the amount of time you need off.
For those looking to take out or upgrade a policy, it is often wise to seek the services of an Independent Financial Adviser, such as those at money4dentists. That way you can find a product that is both affordable and suitable to your needs and requirements. For financial reassurance and peace of mind in a time of need, get critical illness cover.
For more information please call 0845 345 5060, email firstname.lastname@example.org or visit www.money4dentists.com
Association of British Insurers (ABI) – Insurance and savings: Income Protection and Welfare Reform. Accessed online June 2016 at www.abi.org.uk/Insurance-and-savings/Topics-and-issues/Welfare-reform
Association of British Insurers. UK Insurance & Long Term Savings Key Facts 2015. Accessed online June 2016 at www.abi.org.uk/~/media/Files/Documents/Publications/Public/2015/Statistics/Key%20Facts%202015.pdf
Aegon. Critical illness claims paid. 2015. Accessed online June 2016 at www.aegon.co.uk/content/dam/ukpaw/documents/critical-illness-claims-paid.pdf