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The value of Critical Illness cover

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Few people account for the 'hidden costs' of a critical illness diagnosis. Hatice Karadal, manager of the protection team at Alexander Hall, reveals what these costs are and how taking out protection can offer security and peace of mind for homeowners.

Macmillan Cancer Support has predicted, by next year, nearly one in two people will be diagnosed with cancer in their lifetime – quite a shocking statistic.

Whilst the Covid-19 pandemic has understandably dominated any discussion related to health in 2020, critical illnesses continue to significantly impact the lives of many.

In this article, we will address a number of common questions and misconceptions around the product, underlining why it is such an invaluable type of cover for so many.

What does it do?

Critical illness policies offer financial relief for people when they become faced with some of life’s most difficult challenges. The policy pays out a tax-free lump sum on diagnosis of a range of illnesses.

A common misconception is funds will be used exclusively to cover specialist treatment for these. In fact, claimants will often also need financial support to make significant lifestyle adjustments such as home modifications. They may also need money to cover them while they take time out of work or to cover costs of long term care.

Macmillan refers to these as the “hidden costs” of critical illness, because so few people account for them.

Does critical illness cover pay out?

In 2019, critical illness claims were paid out at 91.6%, according to Association of British Insurers (ABI) and a total of £1,215,957 was received by individuals and families.

The five most claimed conditions on critical illness policies in the UK at the moment are cancer, heart attack, multiple sclerosis, stroke, and permanent disability.

Policies tend to cover approximately 50 illness definitions, with some providers insuring significantly more. Each provider’s definition and terms will vary, which is why it is crucial that you receive the right advice when arranging cover.

How much cover do I need?

The needs of each individual will vary, depending on the size of their mortgage, financial commitments, family circumstances and so on.

The cost of cover will, of course, be a factor in determining how much cover clients choose to have. The cost of a policy is driven primarily by the amount of cover you take out, your current lifestyle and state of health. Pre-existing illnesses can potentially impact how much you pay for cover, as well age and whether or not you smoke.

At Alexander Hall, we often advise clients who are in the process of taking on mortgages. It is common in the worst case scenarios these clients will want to be able to repay some or all of their mortgage debt.

If unable to work, some clients would use funds to cover day-to-day living costs such as transport and groceries – it is entirely down to their discretion.

As an adviser, the most important thing ultimately is to ensure that your client’s priorities are accounted for, and in every case, some cover is better than no cover at all.

How to get the advice you need

When it comes to arranging a critical illness policy, it’s not just the sum assured that matters.

Arranging cover with the right provider, for the right amount, involves having a detailed conversation around your circumstances and which types of cover are important to you.

From here our advisers will recommend the most suitable solution. To arrange an appointment or raise any queries, you can contact me on my mobile 07875 800422 or you can email me on: Hatice.Karadal@alexanderhall.co.uk. Alternatively, use the 'Contact Us' page on our website – click here.

This article was originally posted in What Mortgage online. You can see the original article here. Please note this will launch a new web page.

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