How Crucial Is Critical Illness Cover in Life Insurance?

When you buy Life Insurance, there’s nearly always the option to extend your cover to include Critical Illness cover. But with so many options to check and boxes to fill, it’s easy to see why this cover is often overlooked. To make things a little easier we’ve outlined exactly what it is, its key benefits and just how much it can affect your premiums.

Critical Illness cover is designed to pay out a tax-free lump sum upon diagnosis of a set, but expansive list of illnesses. It’s bundled with your Life Insurance policy and so the amount, and period of time you’re covered for will last as long as your life cover specifications.

The unique benefit of this cover is the immediate financial relief it can provide for both you and your family. It can help reduce any financial worries which may have been worsened by your recent news, ensuring that you can spend less time worrying about finances, and more time focused on getting better.

A choice worth taking?

It’s a sobering reality but according to the Office for National Statistics you are four more times more likely to develop a critical illness than die by the age of 65, with higher figures reported for those with a family history of the illness. No one can predict what the future holds but Critical Illness Cover can, at the very least, provide that little extra comfort in knowing you’ve got more protection in place.

In recent years the NHS has significant cutbacks. Consequently the drug funding advice given to NHS by NICE, the National Institute for Health and Clinical Excellence, has become more conservative. Take for example the extremely effective, but costly, cancer-fighting drug Avastin. Despite its positive treatment rate, due to its high expense, the drug is not readily available on the NHS. However for those able to fund it themselves, it is available privately. In circumstances such as these, this additional cover may provide another benefit; namely access to better treatment. The lump-sum could provide a means to fund these superior, more expensive drugs independently which may, in turn, improve one’s prognosis.

In this sense, critical illness cover can be viewed as double benefit which can not only be used to give you and your family financial protection, but could also increase your treatment options. For the added security that the cover provides, it’s no surprise that its inclusion will result in a rise in your monthly premiums. The increase however will depend on individual factors. As an approximation, shown below is a life insurance quote with and without critical illness cover.

Male, non-smoker, aged 30 looking for guaranteed £100,000 of life cover over 25-years:

Life insurance with critical illness: £25.54 a month

Life Insurance only: £6.55 a month (both premiums are commission-free)

As detailed, this added benefit adds approximately £20 to the premium. Of course, this price will vary from person to person and the different providers. It’s also worth noting these prices may be higher on other comparison services which do not offer a money-saving, commission-free route.

Critical illness cover will to some degree, always increase premiums. And so for this reason, this cover may not be for everyone, especially those on a super-strict budget. However for those with more financial flexibility, the added expense may be a worthwhile investment. Adding this extra to your Life Insurance policy is essentially a personal choice, dependent on both your budget and personal needs. Though, in light of the statistical evidence and the greater level of protection it provides for a little extra cost per month, it really is a policy-add on worth due consideration.

Office for National Statistics source accessible here.