Life Insurance or Critical Illness Cover?
The difference between life insurance and critical illness cover is life assurance pays out if you die. Payment from a critical illness plan is on the diagnosis of one of a range of illnesses or conditions defined in the policy document. The core conditions being Cancer, Heart Attack and Stroke. These three conditions account for about 80% of all claims under Critical Illness Plans.
Why Have Life Insurance?
Life insurance pays out a sum of money in the event of your death. It protects those who are financially dependent on you from the financial consequences of your death. It is a very simple policy. Common additional benefits are:
Waiver of Premium
This is an additional policy which will pay your premium for you if you are unable to do so due to long term illness. It is available on most life insurance and critical illness plans typically, you will need to be sick for 6 months before your waiver of premium will pay your premiums. In the event of a claim, the insurance company pays your premiums. are paid by the insurance. until you are well, the policy comes to an end or you die. This benefit could be very important as your long term sickness may make getting new insurance very expensive or impossible.
Total and Permanent Disability
This rider pays out the value of your life insurance if you are classed as being totally and permanently disabled. Definitions vary between insurance companies. For more information on the exact definition of ‘total and permanent disability’ you should refer to the policy document.
Terminal Illness Benefit
This rider will pay the amount of life insurance if a patient is not expected to survive for 12 months
Why Have Critical Illness Cover?
Your chances of survival from cancer, a heart attack or a stroke 50 years ago were slim. If you survived the treatment, the prognosis for leading a long and happy life was low. With advances in modern medicine, this is no longer the case.
However, these life-threatening conditions are often pivotal in a person’s life and priorities change. A Critical Illness plan which for example repays your mortgage on the diagnosis of the illness relieves you of a significant amount of financial stress. Alternatively, using the money to move to more suitable accommodation or make adaptions to your existing home are other options.
Life insurance can also include Critical illness cover as a rider. However, where this is the case, often there is only one payment either on the diagnosis of a critical illness or death.
Do I Repay The Money If I Recover?
The answer is no. If you recover then the money is still yours.
Should I Have Life Insurance and Critical Illness Cover?
The answer is probably both, it very much depends on your circumstances. But you may require different amounts of each. My article on how much life insurance you need should help.
If you want to know more about the best way to protect your family on your death or serious illness, contact me or call 050 594 5217 for a free, no-obligation review of the options.