Why is Critical illness Cover so Critical?
Like all insurances, we know we need to protect ourselves, we know we need to pay for the protection, but we hope we never need to make a claim. Car insurance claims can take time and be a massive inconvenience. Pet insurance claims can be a big upfront expense until the insurance comes through with many vets insisting on payment at time of treatment. Home insurance claims often sneak up your premiums moving forward. But a Critical illness claim means you are going through something incredibly serious, likely life threatening and certainly life changing.
On 11th March 2021 I was diagnosed with a type of Non-Hodgkin’s Lymphoma. At the time I was working my usual role as an Estate Planner, but also supporting retail banking with a project supporting financial difficulty due to COVID. The contract offered no sick pay, and my role as an Estate Planner is self-employed. So, although I still felt able to work both roles for a while after diagnosis the questions were; how long would I feel able, and, did I want to? Time off for doctor appointments, scans etc. But also having just been told my health is now at risk I wanted more time with my family not at my laptop.
But stopping work is not an easy decision, and money is often the biggest factor. If you’re employed then hopefully you will receive sick pay, with some companies offering up to 6months full pay which is fantastic. For my diagnosis however, that wouldn’t be sufficient. Having started chemo at the end of March and stopping my project work on 9th April, my treatment isn’t due to finish until 18th October, at which time I will still be experiencing side effects, and that’s assuming everything runs on schedule which is a big assumption with so many things that can go wrong to cause delays such as COVID, infection, hospital bed availability etc. If my treatment included surgery that would add months onto the treatment and recovery time as well.
Financial planning is needed for Critical Illness
So whether you’re employed or self employed it’s safe to say extra financial planning is needed for Critical Illness. It puts more choices and flexibility in your hands. It removes or helps reduce one of the most stressful factors in most of our lives – money worries, at a time when you’re facing the other most stressful factor in life – health worries.
So why don’t more people have Critical Illness Cover?
The most common objections I hear are; “I’m too young”, “too expensive”, “it won’t happen to me”, and the big one; “the providers never pay out”. So lets look at these reasons;
“I’m too young”
You are never too young! Well, you need to be over 18, but once there, the cost of cover will sneak up every birthday, so the sooner you get cover in place, the more cover you will get for your premium. You can choose to index link cover and premiums so they increase each year if you want the sum assured to grow as your income/financial responsibilities to grow, or you can choose a set sum and a set premium and know exactly where you stand. You may be surprised to know that according to figures published by criticalillness.org.uk the biggest age group to claim on Critical Illness cover is just 45-49 at 24%. But people in their 30’s still make up 12.3% of claims.
Critical Illness Cover isn’t cheap, and certainly is more expensive than it used to be. In years gone by the advice was to have sufficient cover to repay your mortgage in full. As prices have increased the advice now is to have around 3 years’ worth of income as a sum assured to coincide with typical treatment and recovery times. However, some cover is always better than none. By seeking proper financial help when researching cover, you can help set a budget and maximise the cover for that budget. Making sure the premium is affordable long term is crucial as if you need to cancel the premium in the future it’s very unlikely you will get the same cover for your money when you look to replace it.
“it won’t happen to me”
I hope not, but with around 293,600 new cancer diagnosis’ each year, 30,000 people needing heart surgery each year, 100,000 multiple sclerosis diagnosis’ each year and 400 people suffering a stroke every day in the UK the statistics are eye opening. (figures from criticalillness.org.uk). Critical Illness cover often includes cover for your children, Aviva paid out £5million for children critical illness benefit in 2019 alone. This would have meant parents could take time off to focus completely on supporting their children, what a difference it what would be the most upsetting circumstances. Unfortunately, critical illnesses can happen to anyone.
“the providers never pay out”
Insurers have developed a bad reputation over the years, but this is very much a thing of the past. In 2019 98.3% of all Critical Illness claims were paid according to figures from the Association of British Insurers and Group Risk Development. One of the reasons claims aren’t paid is non-disclosure at point of application. This is why it’s so important to seek proper financial advice when researching and applying for cover. Minor medical details may slip your mind over the years or may not seem important so by chatting the application through with an expert it helps recall information, categorise things correctly and complete the application thoroughly.
Please get in touch
If you haven’t currently got Critical Illness Cover in place, please get in touch to speak to one of my colleagues. Dominic set up my cover over 10 years ago, I was a smoker at the time and have some family health history which he helped make sure was included correctly in my application. Dominic searched the market for the best cover and the best price and was able to answer all my questions. The literature he provided enabled me to check my diagnosis was covered, so although my claim time was super quick, I felt reassured even before contacting the provider to claim.
Once a claim is paid, the money is yours to do with what you choose, pay off the mortgage, set as an income until you’re recovered etc. Or maybe use it to make adjustments so you don’t have to return to work or perhaps reduced hours to achieve a better work/life balance? There could be funds for a dream holiday once treatment is finished to celebrate. I am certainly glad to have not had the added stress of financial worries while going through my diagnosis and treatment. The alternative could be statutory sick pay at just £96.35 per week.