Posted by admin On January 19th 2021
Life assurance can lessen the financial impact of someone passing away, but it must be remembered that serious illness can also create a significant financial burden. Critical illness cover provides a tax-free lump sum to meet the additional costs that a person may face in this situation. The illness doesn’t have to be terminal, but could impact on your life in unpredictable ways.
Should the person become critically ill during the policy term, this type of cover protects them in terms of paying out a tax-free lump sum that can be used in any way without restrictions – such as covering medical costs, loss of earnings or monthly expenses whilst recovering.
The range of illnesses and conditions covered would generally include the following, but can vary from one insurer to another:
Other conditions sometimes covered include:
This cover helps minimise any financial impact being ill may have on the person and their family. For an additional cost, this is an option that can be added onto the existing policy when you take out Life Insurance or Decreasing Life Insurance. The money can be used to maintain lifestyle, or pay bills or childcare costs, should the policyholder be in a situation where they have no choice but to take time off work during the recovery time.
Various policies also make provision for payment in the event of total and permanent disability. The definition of this can vary between companies. Some define it as being a total and permanent disability that prevents the policyholder from doing any job to which they are suited by their education, experience or status, while others employ a tighter definition that requires that the disability prevents the person from performing any form of employment at all.
Critical illness can occur at any time regardless of a person’s age and can cause major disruption and stress financially, so having a plan in place as back up can relieve some of this stress. People differ in the way they handle situations – some may use any savings they have, use their illness cover, or rely on an employment benefit package to help supplement their income.