Critical illness cover was introduced as a protection insurance by companies in the late 20th century as a way of assisting anyone who became seriously ill or suffered a bad accident. It was designed to pay out a lump sum on diagnosis of a particular set of circumstances. It really came about due to the progress medical science made as many people made a recovery from illness or injury that in the past may have resulted in death.
Before critical Illness was introduced many people had their lives ruined as they could not work again but had no means to support themselves. The set of circumstances you can claim for include a stroke, heart attack, various forms of cancer, loss of sight or limbs, injuries from serious accidents that may mean you spend your life in a wheelchair and some other circumstances depending on which company you took out the cover with.
The money paid out is Tax Free at present although the government could always change this in future. In many cases critical illness is taken out to pay off debts such as a mortgage but many couples also see it as a way of protecting their lifestyle in the event one of them is unlucky enough to make a claim. A claim is only paid out if the policy holder survives 28 days from diagnosis so many couples also take out life assurance so as not to be financially embarrassed should death occur.
Many people misunderstand the need for life assurance as it is really designed to help those left behind. Imagine a typical family with 2 wage earners who have a child or children. One of them suffers a critical illness or dies. How does the one left behind cope with mortgage payments, other loans, money for clothing, food costs and utility bills if they have no cover in place? Very often the answer is they can't and have to rely on State Benefits and of course many homes are re-possessed due to not being able to afford the mortgage payments.
Critical illness policies now include free child cover up to the age of 18 and is typically 25% of the original cover. It can be used to fund private medical help in the event of a successful claim for both the parent or the child. Every young family or person should consider this very seriously as a way of protecting themselves from relying on others to cater for all their financial requirements if something happens.
Before taking out any form of protection insurance, make sure that you consult a professional advisor who will be able to help you make the right choice.
Written by E-Commerce Manager of Armchair Mortgages, Chris Roche. For more information on income protection, mortgage protection or life assurance plans check out our site and give us a call for a cheap income protection insurance quote.
