HomeNewsBusiness NewsBusiness News 2009Insuring Against the Risk of Serious Illness

Business News 2009

Insuring Against the Risk of Serious Illness

You are five times more likely to suffer from a life-threatening illness than you are to die before you reach 65, insurance claims statistics suggest. You might expect therefore that the risk of falling seriously ill is something that people readily address when planning their finances.

However, whilst most people have some sort of Life Insurance, far fewer address the risk and potential impact of falling seriously ill.  Critical Illness Insurance Cover can offer a solution. David Higgins, of our in-house financial services company Re-Financial Planning, explains more:

"Two of the key questions we ask our financial planning clients are:

  • How would your dependents cope if you were to die?
  • How would you cope if you were unable to work and earn due to illness or disability?

Clients can then choose either to insure against the risk or address it in some other way. Typically, most clients either have, or look to put in place, two forms of insurance cover:

  • Life Insurance to help their dependents in the event of their death; it might replace earnings, pay off a mortgage or provide a lump sum for other use (e.g. shareholder protection). 
  • Income Protection to cover the risk of loss of earnings due to long term illness or disability.

We advise on whether clients have too much or too little cover or indeed whether they have the right kind of insurance cover. In many cases, we consider a third form of cover:

  • Critical Illness Insurance Cover (CIC) which pays a tax-free lump sum if you are diagnosed as suffering from a life threatening condition- the most common conditions resulting in claims are cancer, stroke and heart attack.

There is a wide range of different types of CIC policy - the illnesses covered and the scope of cover can vary (sometimes drastically) between different insurers. You can "bolt on" CIC to a Life Insurance policy, which is cheaper than having two separate policies.

There can be an overlap between Income CIC and Protection Insurance, which pays a tax-free monthly benefit if you are unable to work because of disability caused by sickness or accident. However, used appropriately, the two types of cover can usefully complement one another. 

Although diagnosed with a critical illness, you may still be well enough physically to keep working, so an Income Protection policy would not pay out. Mentally and emotionally however, work may well be the last thing you want to do. Often many clients will look at CIC to cover a year’s worth of expenditure, in order to be assured they can take the time they need to come to terms with their illness, help with treatment or make necessary changes to their home and surroundings.  

Should you have any questions about Critical Illness Cover, or any other type of Life Insurance or Income Protection, or indeed would like to find out what kind of protection you should be investing in, please call David Higgins on 020 8458 7427.

For your free 27 page, electronic guide to Protection, giving details on these and other types of personal and business protection, please send an email to david.higgins@glazers.co.uk