Finance & Money

No-one likes to discuss or think about the idea of falling ill or planning for a death, but most people have dependants and relatives who might struggle financially should they become unwell. Although it’s hardly a cheery subject, many people like to think that relatives will be comfortable and economically sound after they are gone. One of the simplest ways of doing this is to take out a life and critical illness cover plan, essentially a form of insurance which pays out in the event of someone’s death or if they fall seriously ill.

There are a few basic policy types which those looking for a cover product need to be aware of. A basic life assurance plan will protect somebody for a set amount of time at a typically low price. This normally means paying a regular premium in exchange for a guarantee from the insurance company that it will payout a lump sum if the policyholder dies during the period of the policy.

Normally the cost of a premium on a policy like this depends on how old somebody is, their general health and their job, but in many cases life assurance policies offer the option of an extra premium which pays out if the policyholder is diagnosed with a critical or terminal illness. Combined, the two are sometimes known as life and critical illness cover.

Critical illness can mean serious ill health but not necessarily a fatal illness and can often include problems like a heart attack, cancer, or even a stroke. It is different to health insurance policy in that it pays out a lump sum when someone is diagnosed with the problem, as opposed to paying out for the treatment of the problem.

When considering the critical illness cover elements, it’s important to think about what you expect the insurance to protect against. Insurers are normally quite strict and specific over what they pay out for, and all this will be listed in the small print of the policy document. Some deals will pay out for a central collection of common serious illnesses, like heart disease and cancer, while others carry a very long list of specific conditions, perhaps for a higher premium.

Sorting out life and critical illness cover often involves providing the insurance company with your medical history and details about existing conditions. When applying for a policy it is important you are as honest as possible as failing to tell the company about a pre-existing condition or something which you are currently suffering from could mean the insurance is invalid and a payout is not forthcoming after future complications or a new illness.

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