Save money on critical illness cover
- What is critical illness cover?
- What is the average cost of critical illness cover?
- What does critical illness insurance cover?
- How much critical illness cover do I need?
- Is it worth getting critical illness insurance?
- Frequently asked questions
- How to get cheap critical illness insurance
- Critical illness cover estimated cost per month
Critical illness cover, often called critical illness insurance, can be vital if you become unwell with a serious illness and are unable to work. It’s difficult to say how much critical illness cover costs because it depends on a variety of factors, but the average cost of critical illness insurance for a non-smoker is £26 per month.
Let’s get straight into what critical illness insurance is, what it covers and what will affect the price of your policy.
What is critical illness cover?
Critical illness cover is a type of life insurance that pays out if you’re diagnosed with a specified serious illness or injury. You usually receive a tax-free lump sum of money that you can use for whatever you want. For example, you might choose to:
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Pay off your mortgage
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Use it for living costs (due to being unable to work)
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Pay for medical treatment
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Make adjustments to your home to support the change to your life
Having this cover gives you peace of mind that your finances are protected should you become severely ill and are unable to work. Critical illness cover is usually sold to you as an add-on to your life insurance policy, but you can take it out separately.
What is the average cost of critical illness cover?
The average cost of critical illness cover for a non-smoker is £26 per month, while the average cost for a smoker is £43.50 per month. This is based on cover of £50,000 for a term of 25 years.
In reality, your policy could cost much less or much more than this. Many factors affect the cost of a critical illness policy, including:
Type of cover
Like life insurance, you can get level term and decreasing term critical illness cover. Level term pays out a specific amount whenever you claim on the policy to give you money to help with living costs and supporting your family, while decreasing term is designed to pay off your mortgage. That means that as your outstanding loan amount decreases, so does the potential payout you would receive if you claim.
Amount of cover
You can usually choose how much cover you would like when you take out critical illness insurance. It’s important to get this figure right to ensure that you have enough money to cover your expenses if you do fall ill, but you also don’t want to over-insure yourself as it will increase your premiums. An insurance broker or financial advisor can help you decide how much cover you need.
Your age
The older you are when you take out critical illness cover, the more expensive it will be. That’s because insurers consider that you’re more likely to become ill the older you are. As soon as you think you need critical illness insurance, it makes sense to buy it.
Your lifestyle
Your health and lifestyle play a big part in how much your critical illness premiums will be. You will pay much more if you are a smoker or drink a lot of alcohol, and people who are overweight often pay more too.
Any pre-existing medical conditions
Pre-existing medical conditions may increase your premiums as they could make you more likely to fall ill with one of the specified illnesses. While you may think it’s a good idea to not disclose pre-existing conditions to get cheaper insurance, you risk your claim being rejected.
The term of your policy
How long your policy runs for will also affect the cost of critical illness cover. If you have a policy that lasts a long time, your monthly premiums may be lower, but you may pay more over the term of the policy.
What does critical illness insurance cover?
Unlike income protection insurance, critical illness insurance only covers specified serious illnesses. Every policy is different, so make sure you check the terms and conditions, but most policies will cover the following:
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Heart attacks
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Strokes
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Non-terminal cancers
If you take out a more comprehensive critical illness policy, it may also cover the following illnesses:
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Multiple sclerosis (MS)
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Alzheimer’s disease
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Permanent disabilities
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Loss of limbs
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Parkinson’s disease
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Traumatic head injuries
It’s also important to understand the illnesses and conditions that aren’t covered by critical illness insurance:
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Pre-existing or hereditary conditions
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Chronic conditions
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Conditions that aren’t serious or are easily treatable
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Terminal illnesses
How much critical illness cover do I need?
How much critical illness cover you need depends on your personal and financial circumstances. Speak to an insurance broker or financial advisor if you’re unsure how much cover you should take out, but to help you calculate how much cover you need you should calculate:
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Your monthly earnings
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How much you have left outstanding on your mortgage or other loans
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Your household expenditure, including bills, food shopping and necessities like clothing and toiletries
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How much support your dependants would need if you were unable to work
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How much you can afford to pay for cover
Is it worth getting critical illness insurance?
Whether it’s worth getting critical illness insurance depends on your circumstances and your attitude to risk. But when you’re weighing up whether it’s worth getting critical illness cover, you may want to consider how you would cover your bills and expenses if you were unable to work and whether you have any cover through your employment, or a company sick pay policy.
The figures around how many people are living with serious illnesses are pretty staggering and give you an idea why critical illness insurance could be a lifeline for many people. Around 7.6 million people in the UK are living with heart disease or related illnesses, while 1 in 2 people will get a form of cancer in their lifetime.
If you’re unwell with a serious condition, the last thing you want to be worrying about is money – and if you don’t have savings or investments to fall back on, it might be worth taking out critical illness insurance.
Frequently asked questions
What is group critical illness insurance?
Group critical illness insurance is simply critical illness cover supplied by your employer. It’s called group critical illness because it covers multiple employees. More and more businesses are offering this benefit to their employees, so check whether you have any cover through your employer before you buy more.
How long do you have to have critical illness cover before you can claim?
Like most insurance policies, critical illness cover usually has a waiting period before you can claim. It varies from insurer to insurer, but a typical waiting period is 90 days after you’ve taken the policy out before you can claim. However, some policies don’t have a waiting period – though expect to pay more in premiums.
What is the difference between critical illness cover and life insurance?
The key difference between critical illness cover and life insurance is that critical illness will pay out when you’re still alive. Most life insurance will only pay out in the event of your death, though some may pay out if you’re diagnosed with a terminal illness.
Critical illness cover is designed to help you manage the changes in your life due to your serious illness. For example, you might need to make adaptations to your home, or you may want to pay off your mortgage so you can spend more time recovering before going back to work (if at all).
On the other hand, life insurance is designed to support your family after you’re gone. They could use the money to pay off the mortgage on your home so they can stay there, or use some of the money to pay for funeral costs.
Can you get critical illness cover after diagnosis?
Yes, you can still get critical illness cover after diagnosis of a serious illness, but you won’t be covered for that illness. If you’ve already been diagnosed, it will count as a pre-existing condition.
Remember, insurers can ask for access to your medical records – so not disclosing a pre-existing condition could result in your policy being cancelled or any claims being denied.
Is it worth having critical illness cover and income protection?
Yes, it’s certainly worth having critical illness cover and income protection as they serve different purposes.
Critical illness cover pays you a tax-free lump sum which is intended to cover costs such as paying off your mortgage, medical expenses or home adaptations, although you can use it for whatever you want. Once you’ve claimed on your policy, it ends, and you can’t make another claim.
Income protection insurance pays you tax-free monthly payments up to around 65% of your monthly salary when you become ill and are unable to work. You can claim after the waiting period for any illness, injury or disability that stops you from working, rather than having to be diagnosed with a specified condition.
Payments continue until you’ve reached the payment term of your policy (often 2 years) or until you return to work. You can claim multiple times during the term of your income protection policy, though it’s likely that you won’t be able to claim for the same illness again until a certain amount of time has passed.
So, since both policies have different functions, you can have both at the same time. It all depends on your attitude to risk and whether you can afford the monthly premiums.
How to get cheap critical illness insurance
1. Consult an insurance broker
If you’re unsure about what type of insurance you need or how much cover is right for you, it’s best to speak to an insurance broker. Some brokers are ‘advised’ brokers, which means that they can offer you advice on what product might be best for you. Our partners at Unbiased can help you find a broker to assist.
2. Check if you’re already covered
Many employers offer critical illness insurance these days, and if you’ve got life insurance it could be included in your policy already. Check what cover you already have in place first to prevent over-insuring yourself – you might find you need a smaller amount of cover or nothing at all.
3. Consider how much cover you need
Do a thorough audit of your income and expenses, mortgages and loans to calculate how much cover you need. The smaller the payout from your insurer, the lower your premiums will be. However, be realistic – you want to make sure you’ve got enough cover in place should you need to rely on it.
4. Compare quotes
You’ll get the best price for your critical illness cover when you compare quotes between insurers. Get quotes now and we’ll pass you to our partners at Unbiased who can help you find the right critical illness insurance for you.
Disclaimer: This information is intended for editorial purposes only and not intended as a recommendation or financial advice.