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Many of us don’t want to look into the future and imagine ourselves unwell or not working. But have you considered what would happen if your earnings stopped, due to a serious illness or disability? Critical illness cover takes care of those situations, to provide a safety net of financial protection, when facing a certain illness or a medical condition.

It’s definitely worth considering and start planning now, rather than having to endure the cloud of financial uncertainty hanging over you and your dependents.

What is critical illness?

Critical Illness Cover is insurance that pays out a tax-free lump sum if the policyholder is diagnosed with a listed critical illness or become disabled. You can use this pay-out towards your living costs, including your mortgage – or to pay for essential medical equipment or adapting your home.

Which illnesses are covered?

Typically, the illnesses covered will include specific types of cancer, stroke, heart attacks, and some serious debilitating conditions like MS (multiple sclerosis). Other conditions specified on certain policies are major organ transplant, Parkinson’s disease, deafness, traumatic head injury and bacterial meningitis.

Most insurers also cover most injuries that result in permanent disability. Each insurance provider will set out how serious an illness needs to be to make a claim, so be sure to check this before you apply.

Consider your circumstances

The amount of cover you need will depend on your individual circumstances and financial needs. For example, if you’re single and a homeowner, or if you rent a property, you’ll need money to pay the bills if you can’t work. If you have a partner or children and you are the main earner, you might want to consider the cost of supporting them and how you’d meet that if you were too ill to work.

Other costs to consider might include the need to adapt your home or vehicle to accommodate a physical impairment.

Think ahead

Critical Illness Cover will pay out a lump sum in line with your diagnosis and the sum insured you selected. The sum insured (the maximum pay-out) is decided by you and this will be reflected in your monthly policy cost.

To help you decide on the amount of cover you need, think about your key living costs. If you became too ill to work, you might want a lump sum to clear your mortgage or pay off your debts, for example. You can discuss this further with your adviser to help you decide that you get enough cover, at a price you can afford.

Affordable protection

Your policy plan will factor in your current lifestyle and health status. Insurers will assess any risks based on your age, present health condition, including your family medical history. They’ll also need to know if you smoke, or have previously smoked and the type of work you do, as some jobs carry greater health risks.

What about life insurance?

Life insurance is different, because it provides financial security for your family if you die.

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