Illness Cover - your advice please!

HBelfast

Hi,

Can any one share their words of wisdom?!

I'm starting a new business and have been asked if I want Critical Illness cover by Ulster bank who use Aviva insurance. In principal I think this is a good idea soI get paid if I'm unable to work.

I went in for a meeting and realised that the types of illnesses covered are very very specific. For example, to get a pay out if you have cancer, you have to have a malignant form of cancer that is spreading. However, from family experience, I know that being diagnosed with cancer, even if it's not very advanced has an immediate effect on your ability to work due to treatment, medical appointments. It's the small details like this, that really threw me and made me wonder what to do? I could literally be paying money for something that won't pay out when I need it.

Can anyone help?

Thanks,

H

kingstreet

In the first instance, you should consider Income Replacement cover, better known as Permanent Health Insurance. This would pay a portion of your income in the event of inability to work due to accident or illness, following a pre-agreed waiting period.

If your new business can afford to pay you for three months, you would (for example) choose a benefit of perhaps 50% of your monthly income, payable on a claim until you retire, following a three month waiting period.

Individual PHI is paid NI/tax-free, so there's no need to exceed 60% of your gross income and insurers can limit a claim to around that level.

If you've set up as a Limited Company, there are Executive and Keyman options which may also be of interest to you.

I suggest you consider consulting an Independent Financial Adviser (IFA) for the best advice on this issue. Buying direct or via a bank may end up more expensive in the long-run and not result in you getting the right product for your needs.

stephenni1971

HBelfast wrote: »

Hi,

Can any one share their words of wisdom?!

I'm starting a new business and have been asked if I want Critical Illness cover by Ulster bank who use Aviva insurance. In principal I think this is a good idea soI get paid if I'm unable to work.

I went in for a meeting and realised that the types of illnesses covered are very very specific. For example, to get a pay out if you have cancer, you have to have a malignant form of cancer that is spreading. However, from family experience, I know that being diagnosed with cancer, even if it's not very advanced has an immediate effect on your ability to work due to treatment, medical appointments. It's the small details like this, that really threw me and made me wonder what to do? I could literally be paying money for something that won't pay out when I need it.

Can anyone help?

Thanks,

H

The Aviva CIC policy is not by any means the best on the market so I would definitely look around for other better products. From what you are saying it sounds like INcome Protection is really what you want - it is designed to pay an income if you are deemed unable to work regardless of the illness - as long as you have medical evidence you cannot work.

alibamba

This is a query rather than reply!

Re Critical Illness cover, i understand if the policy holder gets ill the insurance company pay out but for arguments sake, if i pay the premiums in my name and its my son who falls ill, will the company still pay out to me? Are there critical illness covers that cover the whole family, rather than just an individual? when googling all i see is, the policy holder is the only one they pay out to, when they fall ill???!!!

kingstreet

alibamba wrote: »

if i pay the premiums in my name and its my son who falls ill, will the company still pay out to me? Are there critical illness covers that cover the whole family, rather than just an individual?

Critical illness cover is personal to the insured - ie those who apply/pay. That can be joint cover for a couple or single, just for an individual. The benefit is paid on the diagnosis (or following a minimum period for some conditions) of an illness which meets the policy definition at the time the cover was effected.

CI policies now often contain "children's cover" based on a percentage of the parents' cover with an overall maximum. For example, one leading plan will pay 50% of the parents' cover with a maximum of £20k.

This is how one such plan works;-

We automatically include children’s critical illness benefit when you choose death or earlier critical illness benefit or critical illness benefit (each a main critical illness benefit).
We will cover each of your children, including step children and children that you have legally adopted, from 30 days old until their 18th birthday for 50% of the main critical illness benefits up to a maximum of £20,000. The children’s critical illness benefit will be based on the benefit amount at the date of claim.

If both parents have separate critical illness benefits, and children’s critical illness cover applies to both, you can have cover up to £40,000. The maximum benefit we will pay for each parent is £20,000. You can claim this benefit once for each of your children.
On payment of children’s critical illness benefit, no further claim for benefit will be admitted in respect of the same child under any policy with us. The cover will continue in respect of each of your other children (if any).

We will make a payment as long as the child survives for 14 days (the survival period) after being diagnosed with one of the children’s critical illnesses or disabilities that meets our plan definition.