Why everyone needs this life-saving insurance policy

It's time to talk about a serious topic that often gets overlooked - insurance. Yes, we know it sounds boring and the last thing you want to do is think about getting sick. But bear with us, because it's important to have financial protection in case the unexpected happens.

Most of us choose to live in denial by thinking that serious illness is something that happens to others and not ourselves. Many believe that they lead healthy lives, eat well, exercise often, and so the chances of becoming sick are slim.

Here is the reality: no one is immune. The biggest causes of illness and death are things like cancer, heart disease and stroke. Now, whilst being healthy can help reduce your chances of getting cancer, the disease also has a lot to do with genetics, as with many other diseases. 1 out of every 2 people will get cancer in their lifetime, which is pretty scary odds.

So, what can you do to ensure life continues in the highly likely event that you are seriously ill?

Invest in a critical illness insurance policy. It could just save your life.

What is critical illness insurance?

Simply put, critical illness cover is a type of insurance policy that pays out a lump sum of money if you are diagnosed with a specific illness that is outlined in the policy. Typical diseases covered are cancer, heart attack, stroke, multiple sclerosis, dementia and so on.

It is really important to note that critical illness insurance is not the same as health insurance, nor is it disability insurance. Health insurance pays for your hospital bills only and many serious treatments, particularly cancer related, will not be covered. Disability insurance pays out a percentage of your income if you are unable to work due to an injury or illness, while critical illness insurance pays out a lump sum of cash.

Generally, critical illness cover is bought with life assurance but it can also be taken out as a standalone policy, which is attractive to younger people with no dependents.

How does the policy work?

First, you need to decide how much cover you need or what is affordable. You can work this out yourself using online calculators or employ an insurance broker or financial adviser.

Once you have decided how much and for how long, you will need to decide whether to pay your premiums monthly, quarterly or annually - sometimes insurers will offer a discount if you pay annually. You will also have a 30-day 'cooling off' period, which means you can cancel your policy and get a full refund should you change your mind in the first few weeks.

It is imperative to read the fine print of your policy to understand exactly what illnesses are covered. Some policies may cover only a few specific illnesses, whilst others may cover a broader range of illnesses.

It is also important to note that there is usually a waiting period before you can make a claim on your critical illness insurance policy. This waiting period can vary depending on the policy, but it is typically 30-90 days from the date of your diagnosis.

When you make a claim on your critical illness insurance policy, you will need to provide proof of your diagnosis. This may include medical records, test results, and other documentation. Once your claim has been approved, you will receive your lump sum payout into your bank account, which could be received as quickly as 2 weeks from diagnosis.

Remember, taking out insurance after you are diagnosed absolutely does not work, so don't leave it to chance.

Why is critical illness insurance essential for everyone?

Critical illness insurance can provide financial security during a difficult time. If you are diagnosed with a serious illness, the last thing you want to worry about is how you will pay for bills or support yourself and your family if you are unable to work.

Having critical illness insurance gives you peace of mind. Knowing that you have a lump sum of money that can be used to cover all of your expenses can alleviate a great deal of the stress and anxiety that comes with a serious diagnosis. It allows you to focus on getting better.

Financial protection during difficult times

We all know that getting sick can be emotionally and physically draining, but it can also be financially debilitating. Being diagnosed with a critical illness can be a life-changing event. Not only do they have to deal with the physical and emotional toll of the illness, but they may also have to face significant financial challenges. Even with health insurance, the costs associated with a critical illness can quickly add up. These costs can include medical bills, travel and other expenses related to the illness.

If you lost your income through not being able to work, how long would you be able to sustain your lifestyle, pay the mortgage, rent, school fees and so on? Dipping into your savings should be a last resort, especially if you plan on surviving the illness!

How much critical illness cover do you need?

As a general rule of thumb, it is recommended that you take the total of between 6-24 months' worth of income and expenditure. However, there are some other factors to be considered too:

Assessing your personal risk factors

Whilst no one likes to think about the possibility of being diagnosed with a serious illness, it's important to be realistic about your personal risk factors. For example, if you have a family history of a specific illness or if you have a job that puts you at an increased risk for certain illnesses, then you should consider a greater amount and do not procrastinate. By doing so, you can have peace of mind knowing that you and your loved ones will be financially protected in the event of a diagnosis.

It's also important to consider your lifestyle habits and any pre-existing conditions you may have. For example, if you smoke or have high blood pressure, you may be at a higher risk for certain illnesses and should take that into account when evaluating your need for critical illness insurance.

Considering your existing insurance coverage

Take a look at your current insurance coverage to see if you are already covered for critical illnesses. Many health insurance policies offer some level of coverage for these types of conditions, but the amount of coverage can vary widely. Never rely on employer-sponsored health insurance, as when you come to leave, you will have no protection whatsoever.

Factoring in your financial situation

Finally, it's important to consider how much financial support you would need if you were diagnosed with a critical illness. How much of your income would be lost if you were unable to work? How much would you need to cover medical bills and other expenses? These are all important factors to consider when deciding on the right level of coverage for your critical illness insurance policy.

It's also important to consider your overall financial situation. Do you have an emergency fund that could cover some of your expenses in the event of a diagnosis? How much debt are you currently carrying? Do you need to adjust your budget to buy insurance? These factors can help you determine how much coverage you need and what you can afford.

Choosing the best policy

There are 4 key things to consider when buying insurance:

Features and benefits

Do your research and compare different policies to find the one that best suits your needs. Look for a policy with a wide range of covered illnesses and a high payout amount.

Exclusions and limitations

Make sure you understand what is covered and what is not covered under your policy. Some policies may have exclusions or limitations on certain illnesses, so make sure to read the fine print.

Amount of cover

Think about your financial situation and determine how much coverage you would need in the event of a critical illness diagnosis. You may want to consult with a financial advisor to help determine the appropriate amount of coverage for your specific situation.

Cost of premiums

Whilst cost is important to consider, it is last on the priority list. If you ever think insurance is too expensive, think about the cost of not having it. Once you have narrowed down a couple of policies with the same features and benefits, you can select the product that is cheaper.

What do you do now? Your life could depend on it

So there you have it - why everyone should have a critical illness insurance policy. It may not be the most exciting topic, but it's an important one to consider. Having financial protection during an unexpected illness can help ease the burden and provide peace of mind. Remember to do your research and find the policy that best suits your needs or speak to a qualified financial planner. Don't wait until it's too late - get protected and give yourself and family some peace of mind.