Critical Illness Insurance | 2024 Update - Temple Wealth Management

Critical illness insurance is a type of insurance policy you can arrange to help provide funds if you were to suffer a serious illness. The first critical illness policies were developed by Dr. Marius Barnard in South Africa in the early 1980s. He was motivated by witnessing the financial hardship his patients often experienced when they suffered such illnesses. The insurance works by providing a tax-free lump sum payout to a policyholder if they become critically ill. This can be crucial in helping them at a difficult time and ensuring money problems do not make matters worse. Critical illnesses covered by policies can include cancer, heart disease, strokes, kidney failure and organ transplants, amongst a host of other conditions. Different critical illness insurance policies may have different conditions they cover and may vary in the wording of how and when they pay out, an important factor to note and one which we will come back to shortly. If you were to suffer one of these illnesses then very quickly you would receive a lump sum if you had such a policy in place. This means you would have money available to help pay your ongoing bills such as your mortgage or rent payments and other household bills. The sum may also help you with medical costs. For a lot of people they may be unable to work for a period of time so this is invaluable especially as bills and expenses are going to continue and government financial support in these situations is often limited. The payout is provided to you if you suffer one of the illnesses stated by your policy terms. If you recover from this illness the sum is not reclaimed. Many people do make full recoveries so maybe think of this as financial recovery insurance. How likely is any one individual to suffer such an illness? Sadly the answer is quite likely which is why this insurance is pivotal within a well-constructed financial plan. For example, a non-smoking 40-year-old man is just over four times as likely to suffer a critical illness before retirement age of 65 than he is of dying. In the UK today more than one in ten people are living with heart and circulatory disease and it is estimated that by year 2030 four million people will be living with cancer. But survival rates are good so in each case the prospect of living for a long time after diagnosis is still high. If you are looking to arrange this type of policy you should take financial advice because you need to make sure the range of illnesses covered is comprehensive. Also some policies vary in how severe a condition must be. For example, a minor stroke could be excluded. Insurance companies offering such policies within the market may have different lists of illness they cover or different definitions so you cannot look at the monthly cost from each company and assume you are comparing like for like. The last thing anyone would want is to arrange to have this insurance and then find they suffered the wrong type of illness because the policy they had chosen wasn't as comprehensive as it could have been. Taking advice around this will help you find the most suitable policy. Other matters to consider are whether you arrange a joint policy if you are a couple or have individual policies or should you combine critical illness with a life assurance policy or keep the critical illness insurance separate. In terms of the cost of a policy this will be dependent on your age, current health, how long you need the cover for and the amount of cover you wish to put in place. This can all be explored in the advice process and this can include looking at your overall budgeting and expenditure. In many cases it may be possible to reorganise budgets to free up monthly expenditure. Critical illness insurance is a valuable protection against a very real risk. Getting a policy in place provides peace of mind. We are here to help you explore your options around this type of insurance and advise you on the most suitable way forward.