Critical Illness Cover is abbreviated to CIC and often referred to as ‘kick’ by those who work with it daily.
Like the title suggests, Critical Illness Cover pays out should you suffer a critical illness.
Different insurance companies have different (but always, very specific) definitions as to what constitutes a critical illness. All of them will, for example, say that they pay out if you get cancer, but the types and severity of cancer covered differs from one provider to another.
Our advisors are very careful to make sure you understand this when you call. They have a paragraph they like to say which covers the technicalities quite well. Here it is:
CIC is designed to pay out should you be diagnosed with a critical illness condition as defined in the policy terms and conditions.
If you would like to know exactly what situations CIC covers, one of our advisors will be able to help.
Critical Illness Cover is there to provide you with money if something happens that means you can’t work anymore.
Your premiums are set and guaranteed at the start of the policy.
There are some policies where this isn’t the case, but your advisor will make sure you are fully aware of that. Generally though, and for the vast majority of policies, it is true.
That means if you take both a Life Insurance and CIC policy and the monthly premium is £25, then it will always be £25.
There are so many factors which insurance companies take into account to calculate your premium, but the most important, by far, is your health and lifestyle.
If you are a healthy, active, non-smoker in your 20s, your premiums are going to be really low. As time goes on, you become older (definitely) and a little less healthy (possibly) - consequently, your potential premiums will rise.
But CIC premiums are based on your health at the start – they’re not updated and won’t change. This is why it is often financially better for you to get a policy when you are younger.
Guaranteed premiums are great for young, healthy people which is why you should start to consider life insurance at an earlier age. CIC cover is therefore most cost effective when bought early on in life.
Critical illness cover pays you out an amount should you become critically ill (as your insurer defines it), so that you don’t have to worry about finances while you recover.
Critical illness also covers many physical injuries, such as blindness, or the loss of a limb – it isn’t limited to afflictions such as stroke or cancer.
Like Life Insurance, CIC is at its best when tied to your personal needs. If you would like to have enough cover to recuperate for two years, for example, you could set your CIC to two years’ worth of salary – so if you were earning £25,000p.a., you’d set your CIC to £50,000 and that’s the amount you’d receive should you fall ill. It’s a little better than that actually - the insurance is a tax free sum and your salary isn’t, so the amount you get is quite a bit more than you’d normally take home from work.
Financial peace of mind may also reduce stress and help you concentrate on your recovery.
Another option is to tie your CIC onto your Decreasing Term Assurance essentially meaning that should you fall critically ill, your mortgage will be paid off. It’s a surprisingly cheap version of CIC and one worth discussing with your advisor.
Due to the differences of cover provided by competing insurers, plus the complexities of personal needs, Critical Illness Cover is something which should be explained fully with one-to-one expert advice – so give us a call today, or request a call back and find out exactly what cover fits your life.