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  • FIRST POST
    • molit
    • By molit 9th Oct 17, 12:57 PM
    • 366Posts
    • 347Thanks
    molit
    Critical illness cover
    • #1
    • 9th Oct 17, 12:57 PM
    Critical illness cover 9th Oct 17 at 12:57 PM
    Hi

    I have no dependants, but have been wondering about critical illness cover recently. I think at work I get 3 months paid sick leave, but other than that I have nothing. I have an emergency fund, but wondered whether other people go for it, and also, if it does pay out?

    Mo
    No longer an accidental landlord, still a wannabe millionaire
Page 1
    • dunstonh
    • By dunstonh 9th Oct 17, 1:20 PM
    • 89,852 Posts
    • 55,455 Thanks
    dunstonh
    • #2
    • 9th Oct 17, 1:20 PM
    • #2
    • 9th Oct 17, 1:20 PM
    and also, if it does pay out?
    Most CIC policies report payouts on over 95% of claims made.

    In the pecking order, it tends to fall below permanent health insurance (PHI for short - the best form of income protection). PHI is not specific to critical illnesses and replaces income rather than provide a lump sum.
    • YHM
    • By YHM 9th Oct 17, 2:50 PM
    • 125 Posts
    • 43 Thanks
    YHM
    • #3
    • 9th Oct 17, 2:50 PM
    • #3
    • 9th Oct 17, 2:50 PM
    Critical Illness is a fantastic policy in terms of its intent, however, many people mistrust it as they either think they are untouchable and will never suffer said critical illness or see it as some form of exploitative game by insurers to not pay out on a claim. I can assure you neither of these are true.

    Comparatively it isn't cheap against life insurance, but this is due to the likelihood you are to need to claim on the policy.

    If you have a mortgage liability which is solely reliant on your income, it is an essential part of your protection toolbox.
    I am a Mortgage Broker.

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice
    • Chris Pollard
    • By Chris Pollard 9th Oct 17, 3:44 PM
    • 87 Posts
    • 33 Thanks
    Chris Pollard
    • #4
    • 9th Oct 17, 3:44 PM
    • #4
    • 9th Oct 17, 3:44 PM
    molit - Does it pay out? Yes. go onto every main insurer's website and you will see the overwhelming majority of claims are paid. As dunstonh says, disability cover should come first. If you suffer from an injury or illness that is not covered by CIC (for example a musculoskeletal or mental health problem) you may be unable to work but you would not have a CI pay-out. If you go onto LV's website and check out the "risk reality" calculator it will tell you the likelihood of you dying, suffering a serious illness or being off work for more than two months. 80%+ of CI claims come from cancer, heart attacks and strokes. However, the majority of income protection (IP or PHI as above poster refers to it) are from musculo-skeletal and mental health.

    If the budget allows buy both IP and CI. You can tailor the waiting period before the IP benefits are paid (you say you would be paid for three months so that seems a logical waiting period). Work out how much income you need (when in claim the benefits do not attract income tax or NI) to cover essential bills, rent, mortgage etc. If you've still got some budget left over then by all means take out some CI. You'll find almost every insurer will also include "life" cover with all CI policies.

    Best of all speak to a broker/financial adviser - particularly for IP as whilst it isn't rocket science, there are quite a few things to consider.

    Good luck
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