Insurance

Critical Illness Cover

Critical illness cover, also known as critical illness insurance, is a long-term insurance policy which covers serious illnesses listed within a policy. If you get one of these illnesses, a critical illness policy will pay out a tax-free, one-off payment. This can help pay for your mortgage, rent, debts, or alterations to your home, such as wheelchair access, should you need it.

WHAT IS CRITICAL ILLNESS COVER?

Critical illness insurance will pay out if you get one of the specific medical conditions or injuries listed in the policy. But be aware that not all conditions are covered and policy will also state how serious the condition must be. 

Don’t confuse critical illness cover with life insurance, although they are sometimes sold together.

There was a peak of over 2.8 million people not working due to long-term sickness in the UK in November 2023. This figure has been rising considerably since 2019.

Most policies will also consider permanent disabilities as a result of injury or illness. It only pays out once and then the policy ends.

Some policies will make a smaller payment for less severe conditions, or if one of your children has one of the specified conditions.

WHAT ISN’T COVERED?

Some serious illnesses might not be covered, for example, some cancers and conditions not listed in the policy.

You probably won’t be covered for health problems you knew you had before you took out the insurance, and this type of insurance doesn’t pay out if you die. What’s covered and what’s not, will be set out in the policy details so make sure you’re fully aware of them and that they cover your needs.

DO I NEED CRITICAL ILLNESS COVER?

State benefits might not be enough to replace your income if something goes wrong.

if you’re eligible, welfare benefits range from around £67.20 a week to just over £84.80 a week, depending on your circumstances (i.e. whether or not you have children, a certain level of savings, or if your partner works).

You should certainly consider getting critical illness cover if:

• You don’t have enough savings to tide you over if you become seriously ill or disabled.
• You don’t have an employee benefits package to cover a longer time off work due to sickness.

WHO DOESN’T NEED A CRITICAL ILLNESS POLICY?

You might not need a Critical Illness Policy it if:

• You have enough savings to fall back on and can cover expenses such as bills, loans, medical costs or a mortgage.
• You have a partner who can cover living costs and any shared commitments, such as a mortgage.
• You already have some cover included in as part of your employer’s employee benefits scheme.

HOW MUCH DOES A CRITICAL ILLNESS POLICY COST?

Your monthly payments will depend on a number of variable factors, that are all taken into consideration to determine the level of cover you are likely to require. 

These include:

• Age
• The amount of cover you take out
• Whether you smoke or have previously smoked
• Health (your current health, your weight, your family medical history)
• Job (some occupations carry a higher risk than others and might mean you have to pay more each month

Income Protection Insurance

There was over 2.8 million people not working due to long-term sickness in the UK in November 2023. This figure has been rising considerably since 2019, when there were just 1.97 million people economically inactive for this reason.

If something happened to you would you be able to survive on savings, or on sick pay from work? 

If not, you’ll need some other way to keep paying the bills and you might want to consider income protection insurance.

Income protection insurance (sometimes known as permanent health insurance) is a long-term insurance policy designed to help you if you can’t work because you’re ill or injured.

It ensures you continue to receive a regular income until you retire or are able to return to work.

An Income Protection Insurance Policy will replace part of your income if you can’t work because you become ill or disabled.

The policy will pay out until you can start working again or until you retire, die or the end of the policy term – whichever is sooner.

There’s often a waiting period before the payments start – you generally set payments to start after your sick pay ends, or after any other insurance stops covering you. The longer you wait, the lower the monthly premiums.

It covers most illnesses that leave you unable to work, either in the short or long term (depending on the type of policy and its definition of incapacity).

You can claim as many times as you need to – while the policy lasts, however it’s important to fully review the policy before committing as each will have their own terms relating to claims. With income protection insurance, everything depends on getting the right policy.

DO I NEED INCOME PROTECTION INSURANCE?

According to the ABI, one million workers a year find themselves unable to work due to a serious illness or injury.

It doesn’t matter whether or not you have children or other dependants – if illness would mean you couldn’t pay the bills, you should consider income protection insurance.

You’re most likely to need it if you’re self-employed or employed and you don’t have sick pay to fall back on. Always check what your employer will provide for you if you’re off sick.

It is possible you might not need income protection insurance if:

• You could get by on your sick pay. For example if you have an employee benefits package which gives you an income for 12 months or more.
• You could survive on government benefits. But they might not be enough to cover all your outgoings.
• You have enough savings to support yourself. Remember that your savings might need to see you through a long period.
• You could take early retirement. If you’re near retirement age, perhaps you could afford to retire early. If you’re unable to return to work you might be entitled to take your pension early.
• Your partner or family would support you. Perhaps your partner has enough income to cover everything the two of you need.

HOW MUCH DOES INCOME PROTECTION INSURANCE COST?

How much you pay each month will depend on the policy and your circumstances. Usually income protection insurance covers a wide range of illnesses and situations and has the potential to pay out for many years.

The cost of a policy will vary based on a number of variable factors, including:

• Your age
• Your job
• Whether you smoke or have previously smoked
• The percentage of income you’d like to cover
• The waiting period before the policy pays out
• The range of illnesses and injuries covered
• Health (your current health, your weight, your family medical history etc)

It’s important to review more than one policy, and be sure take advice on these matters prior to committing to a policy.

Buildings Insurance

If you own your own home, you will more than likely need to have buildings cover just in case your home is damaged and needs a repair. Most often lenders will need to be sure that a policy is in place before they approve an application. 

If you’re a landlord, it’s your responsibility – not your tenants. 

If you own your own home this sort of insurance should be a top priority.

WHAT IS BUILDINGS INSURANCE?

This is a policy which covers damage to the structure of your home such as the walls, roof and floors. 

Home insurance is a general term used to describe two very different types of insurance:

• Buildings insurance – for permanent fixtures and fittings, like kitchens and bathrooms
• Contents insurance – for things you keep in your home, like furniture, TVs, personal belongings and some types of flooring including carpets

You can buy both types of insurance separately, or in many cases, you can get them as a joint policy from one insurance company.

DO I NEED BUILDINGS INSURANCE?

If you own your own home or are renting out a property then you will more than likely need to have buildings insurance.

So not having a policy in place could put your mortgage – and your home – at risk.

You don’t need buildings insurance if you’re renting a property, because it is your landlord’s responsibility to sort out a buildings insurance policy.