Why Life and Critical Illness Insurance Matters: Level Term Life Insurance is Not Enough to Protect Your Family

Why is a Life and Critical Illness Insurance Policy Necessary?

Research by Bupa (a leading provider of health insurance coverage) showed that a 35-year old male was five times more likely to make a claim under a critical illness policy than level term life insurance. This means that it is essential for those with a young family, unpaid debts and/or a mortgage. A sudden loss of income can be financially catastrophic, particularly if that person is the sole bread winner.

The Cost of Critical Illness Policies

It doesn’t take a professional actuary to determine that the likelihood of developing a life-threatening health problem increases with each passing year. Although a combined life and critical illness insurance policy is always more expensive, it is cheaper to take out coverage when younger. It is generally cheaper to take out coverage for women than it is for men, although this will be affected by the individual’s choice of lifestyle. Those who drink heavily or smoke will need to pay a higher premium.

Be Honest About Pre-existing Medical Conditions

Although premiums won’t be reduced, it is essential that the insured is completely honest when answering questions about previous health problems and their choice of lifestyle. Whilst admitting to being a smoker will increase monthly premiums, failing to do so will invalidate the policy. The insurer is able to perform a series of checks to ascertain the validity of the data they have been provided. Any pre-existing medical conditions will be specifically excluded from the coverage.

When Will Critical Illness Protection Pay Out?

Following the diagnosis of a life-threatening disease, a life and critical illness insurance policy will pay out once the insured has survived for a period of not less than 15 days. The Association of British Insurers (ABI) requires that each insurer should pay out upon diagnosis of one of 23 different life-threatening illnesses. Whilst many providers will compensate the insured upon the diagnosis of a number of other conditions, these are the bare minimum criteria that the ABI specifies.

Level Term Life Insurance is Not Enough

The likelihood of a term life policy paying out is less than 1%, but the figure is far higher for those with critical illness policies. The reality is that a lot of people will survive following a life-threatening illness. Don’t forget that a weak heart is unlikely to be aided by unpaid debts and collection agency activity. How will medical bills and subsequent care be paid for as well? The cost of a combined life and critical illness insurance policy is higher, but it is a price that is well worth paying.