A short guide to critical illness cover

By September 21, 2021Financial Planning

This content is for information and inspiration purposes only. It should not be taken as financial or investment advice. To receive personalised, regulated financial advice regarding your affairs please consult us here at WMM (financial planning in Oxford).

Serious illness or injury can strike at any age – regardless of health – and change your life completely. We see it in the news all the time. One recent story tells of how Maria O’Neill, aged 28, was diagnosed with an aggressive form of breast cancer. 5 weeks later, her mother was diagnosed with ovarian cancer. From November, Maria’s sick pay will be halved and she will stop getting paid entirely from April 2022 – leaving her financially vulnerable, as well as sick.

Critical illness cover exists to help people in these kinds of situations. It provides a lump sum in the event that you are diagnosed with a condition defined in the policy. Below, we explain how this type of financial protection works and ways it can be integrated into a financial plan.


What does it cover?

Critical illness cover can apply to a range of medical conditions. You will need to check the small print to determine which ones are covered, however, as these will vary from policy to policy. As a general idea, medical conditions mentioned in many policies include:

  • Major organ transplants
  • Alzheimer’s
  • MS (multiple sclerosis)
  • Traumatic head injury
  • Stroke
  • Heart attack
  • Different types of cancer
  • Parkinson’s disease

If you are rendered permanently disabled by an injury or illness, moreover, many insurers will also consider this when you make a claim.


Who needs it?

It is easy to assume that your employer will look after you if you fall seriously ill. However, the reality for most is that, within 6 months, employees are usually moved onto Statutory Sick Pay. In 2021-22, Employment and Support Allowance ranges from £74.70-£113.55 per week, which may not be sufficient to cover your bills if you can no longer work.

For those with minimal financial commitments or large amounts of savings to tide you over during a period of serious illness or injury, critical illness cover may not be very important. If you have dependents, however, such as small children, it could be vital – especially if your family relies heavily on your income. This is even more urgent if your employee benefits package is lacking or non-existent.


What does it cost?

Like most insurance policies, critical illness cover involves paying a monthly premium until it expires. The cost, however, varies depending on your circumstances and the policy itself. This is why it is important to compare different options. Costs may be affected by:

  • How old you are
  • Whether you are a smoker or not
  • Your current health and weight
  • Family medical history
  • Your occupation (higher-risk jobs may put up the premium)
  • Where you live
  • How much cover you want


Why use a financial adviser?

Critical illness cover policies are complex and there is a lot of fine print to work through. This can lead to mistakes when people take out cover on their own. Few things are as stressful as a claim that will not pay out, even after paying the premiums faithfully, because the policy was not read properly or fully understood before purchase.

A financial adviser can really help here by walking you through the details and making effective comparisons between policies, to find the best one for your needs. It provides an extra peace of mind to get an experienced set of eyes on your policy, and offers more protection if a future claim is disputed or rejected by the insurer. 



Interested in finding out how we can optimise your financial plan? Get in touch today to arrange a free, no-commitment consultation with a member of our team here at WMM. 

You can call us on 01869 331469