Should Critical Illness Cover Be A Critical Part Of Your Financial Planning?

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Critical illness is up there with one of the most important issues in life that people just don’t like or want to talk about. Now, at the risk of sounding depressing, have you ever thought about how you were to financially cope if you fell too ill to work? Could your family cope? Perhaps this New Year should encourage you to kick start some financial planning and preparation for just such a scenario why not get some professional life insurance advice and even a life insurance quote or two. Don’t take a macabre view on the process, see it as an investment, should (being the imperative word here) anything happen to you.

Recent statistics released by the Association of British Insurers suggest that Brit’s pay an annual average of 919 on Life Insurance. This is a surprisingly high amount considering so many of these individuals have no form of critical illness cover. Most Life Insurance policies will have the option to add additional critical illness cover onto your policy. This then ensures that you and your family are provided for should you fall too ill to work. Don’t buy into life cover blindly, read the small print. Most will not pay out if you become too ill to work, and instead pay out after you have passed away. This is certainly of no use if you are battling with a critical illness for years.

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As with most products offered by financial services lenders, critical illness policies will not protect you against every possible effect of varying conditions. While you will be covered against the more common life changing illnesses, full coverage cannot be guaranteed. To deal with this level of uncertainty, it is best to obtain financial advice in order to find the most suitable policy for you.

So how many of you have now started to fall asleep? Ok, obtaining health insurance is a bit of a complex and time consuming task, but as with all investments, it pays to look at the potential long term benefits. Don’t risk your family’s future financial security just because you didn’t read the small print on your life insurance policy. Although, I’m not writing to lecture, here are some useful tips if you are considering taking out critical illness cover…

Britain is an astute population, and according to Prudential, less than a quarter of the population make an insurance decision based on price alone. However, this is totally insignificant when you look at Scottish Provident research that suggests six in ten people in the UK have no cover at all. It is clear that the importance of health and life insurance is greatly underestimated within this country. Understandable, more homeowners are more worried about debt and debt consolidation. But ask yourself what situation you’d be in if you were to fall ill now whilst you are already struggling financially? If you have no cover, you will find yourself in an even worse situation. Food for thought perhaps…?

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However, it is not down to pure ignorance of the population that these statistics are so low. Often, a majority want to look into such policies, but who don’t fully understand what’s on offer and don’t know where to get impartial advice. In fact, back in 2006, the Financial Services Authority warned that clearer and more readily available information is needed for the consumer. Today, the internet provides a huge amount of information if you feel that you need further clarity on the issue of critical illness cover.

In the simplest terms, critical illness cover protects an individual if they suddenly contract a critical illness. The UK’s biggest killers, heart disease and cancers are automatically covered in health insurance policies. Similarly, strokes, cancers, Parkinson’s disease, kidney failure and Alzheimer’s disease are all generally covered. However, most policies specify that the individual must survive a certain length of time following their diagnosis, usually between 1 to 2 weeks, in order to receive the payout. Therefore, it is important to thoroughly understand the policy you are considering.

However, there are some other illnesses that are not covered in such policies. Take Diabetes for example. Most individuals with diabetes can continue to live a fairly normal life for years following diagnosis, and so lenders do not include the illness as part of their policy. Yet diabetes is linked to various other illnesses which, as a result, are not insurable either. An example of which is nerve damage. Nerve damage as a result of diabetes can result in the loss of extremities, such as hands or feet, but cannot be insured. However, if a person was to lose their hands or feet by any other means that would be completely insurable. This is a shocking piece of information, especially as diabetes is the 5th most common cause of death in the UK.

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While this may seem an unfair system, the financial services do have to draw a line somewhere. And as I’m sure this will frustrate many people within the UK, diabetes is just one example in a long list of those that do not actually qualify for insurance cover. But should this stop you from obtaining critical illness cover? At the end of the day, it depends entirely on your personal circumstance. If you already have stand alone life insurance in place, then surely it would make sense to add the critical illness feature? Or, if you have neither of these, perhaps 2011 should be the year where you at least look into the process?

Of course no one can predict the future; we don’t know when we’re going to fall ill, or how it will affect our lifestyle. For this reason there is no such thing as a comprehensive policy when it comes to health insurance. Although, researching your family’s medical history and gathering together information on your lifestyle such as habits, diet, exercise and previous illness can really help determine the best policy for you. So returning to the original question, how critical is critical illness cover? It is certainly something to seriously consider. While it is complex and sometimes complicated, you’ll be thanking yourself should anything happen which inhibits you from working.

Debi writes for Just Life Insurance the UK’s No1 site for life insurance advice, and market leading life insurance quotes.

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