Critical illness insurance
With critical illness insurance, you can protect your family’s financial future while you focus on recovering. Get expert guidance to find the right coverage for your needs today.
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Sickness is an inevitable part of life, which raises the question: does health insurance cover critical illness? While standard health insurance might offer some support, the best critical illness insurance is specifically designed to provide financial protection in case of a major medical emergency.
Critical illness insurance is an essential part of a well-rounded financial plan. It gives you peace of mind by ensuring you are covered for serious conditions that could lead to financial strain for you and your family. Despite its importance, many people still overlook this type of insurance.
What is critical illness insurance?
Severe illness cover pays out a lump sum upon your diagnosis or surgery for a range of illnesses that are covered by your policy. By paying regular premiums, you ensure your policy remains active and ready to provide protection when needed.
It is meant to provide peace of mind and support for you and your family during a challenging time, allowing you to focus on recovery without the added stress of financial concerns.
You can fall seriously ill at any point in your life. Although 46% of critical illness claims in the UK were made by over 50s, you never know when you might fall ill with cancer or have a heart attack.
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Assessing your need for critical illness insurance
Imagine being diagnosed with cancer and needing months of treatment. With critical illness insurance, you can focus on recovery, knowing that your financial obligations are covered.
Do I need critical illness insurance?
We know that thinking about illness or injury is difficult, but it is important to consider how it could impact your earnings and your family's well-being.
If you think you might require critical illness insurance, you should ask yourself these questions:
- Do you have the savings?
- Are you a sole breadwinner in your family?
- What is your household’s income?
- Do you have dependents in need of financial protection?
- Does your company provide employment benefits?
- Do you have a family medical history of severe illness, including aggressive cancer?
How much critical illness coverage do I need
As a rule of thumb, to ensure adequate critical illness protection, you will need three times your annual salary.
This is because, in the event of diagnosis, it typically takes at least three years for you to recover or adapt to potential lifestyle changes after a serious illness.
This general rule helps ensure you have enough financial coverage during an extended recovery period.
Benefits of critical illness insurance
Here are some key benefits of critical illness cover that can help alleviate the burden during tough times.
- Cover living costs, including bills and childcare.
- Pay outstanding loans, such as mortgage repayments.
- Make changes to your home to accommodate health needs.
- Pay for your medical care and equipment.
- Cover your children, too, as a lot of policies include them.
- Tax-free payout.
In addition to critical illness coverage, explore income protection and disability insurance for further financial security. Income protection ensures you receive a portion of your salary if you are unable to work, while disability insurance offers stability for permanent disabilities, helping maintain your lifestyle.
Does health insurance cover critical illness?
Typically, health insurance policies do not directly cover critical illness.
Health insurance plans usually cover the costs of medical treatment, including:
- Doctor’s visits.
- Medication.
- Hospital bills.
Critical illness cover offers a lump sum payment when you are diagnosed with certain severe health conditions or require a specific medical procedure, including:
- Cancer, excluding less advanced cases.
- Kidney failure.
- Cardiovascular disease, including heart attack and stroke.
- Major organ transplants.
- Muscular dystrophy.
- Brain damage.
- Coronary artery bypass surgery.
- Paralysis of limbs.
This tax-free lump sum can be used for anything you need, including paying medical bills and replacing your lost income.
Generally, to qualify for a claim, the illness must cause permanent symptoms. It is important to review your health insurance and critical illness policy details to determine what they cover.
Do I need a critical illness insurance policy if I have life insurance?
Absolutely. It is important to consider having both types of coverage for comprehensive protection for you and your loved ones.
A life insurance plan provides a safety net for your loved ones in the event of your death. The insurance provider will make a one-off payment to your family when you die. It is a great option if you have dependents, helping them cover costs of the funeral, mortgage, and any other financial commitments.
In comparison, severe illness cover is a lump sum paid out to you if you get a serious illness diagnosis. Thanks to this, you and your family are covered until you regain your health.
Severe illness cover provides peace of mind knowing that, if the unexpected happens, you will have the financial means to focus on your recovery. The lump sum benefit can be used to cover medical expenses, including private care, to alleviate financial stress.
Combining critical illness insurance with life insurance gives you and your family financial protection during tough times.
Does critical illness insurance pay out?
It is a common misconception that critical illness cover does not pay out but rest assured that many people find financial relief through their policies.
According to the Association of British Insurers (AB), in 2023, critical illness policies had a 90.5% payout rate, amounting to over £1.3 million over the year with the average claim paying out £68,354.
The only reasons a critical illness claim might be denied are if the illness is not covered or if you did not provide all relevant information when you bought the policy. Ensure you disclose all relevant details, including pre-existing health conditions, when purchasing your policy to avoid complications.
Critical illness insurance in South Africa
For expats in countries like South Africa, critical illness insurance can be especially important due to the additional healthcare considerations in foreign environments. Holborn’s advisers are here to support you in making the right choice for your needs, guiding you through the options with care and understanding.
Holborn has partnered with the top insurance providers around the world to offer you the best severe illness cover options. Our experienced financial advisers are committed to protecting your health and well-being. Contact us today for a personalised consultation and ensure you and your family have peace of mind.
Frequently Asked Questions
Critical illness insurance provides a lump sum pay-out if you are diagnosed with a severe illness.
