Serious Illness Cover
As it’s mens’ health week, we are asking if you have you ever thought about the cost to your family if you were diagnosed with a serious illness that prevented you from working. Private medical insurance will only cover your medical expenses (and sometimes not even all of them). Serious Illness Cover, also known as Critical Illness Cover, pays out a tax-free lump sum in the case where the illness or disability you have is specified on your policy.
The lump sum can provide financial support to your family if you are off work or it could be used to purchase equipment that would help you recover. Being diagnosed with a serious illness is traumatic enough. The last thing you need is the worry of how you’re going to pay your bills.
But I have Mortgage Protection!
If you are a homeowner, you must have Mortgage Protection cover. It would be a good idea to check the details of the policy. You may only be covered on death. There may be absolutely no provision for inability to pay your mortgage due to a serious illness.
You can’t add serious illness cover to the Mortgage Protection policy but you could replace the policy with one that also covers serious illness, or you can set up a stand-alone serious illness policy (see below).
I have Life Assurance!
If you have life assurance separate to your mortgage protection, again, you should review the detail to see if serious illnesses are covered.
If you find you are vulnerable and want to take out cover, there are two types of Serious Illness Cover that can be set up along with life assurance on a policy.
- Accelerated Serious Illness Cover
If you make a claim on Accelerated Serious Cover, the amount paid out for this claim will reduce your life cover by the same figure. The downside of this option is that if you claim on the serious illness policy, you will not be as well covered in the event of death, even though you will have paid the same premiums over your life.
Sorcha takes a Guaranteed Term Protection Policy until age 84 for €200,000 Life Cover and €100,000 Accelerated Serious Illness Cover. Sorcha is diagnosed with a serious illness that is listed as one of the illnesses covered on her policy. The life company pays out €100,000 for the serious illness. Her Life Cover then reduces to €100,000 (€200,000 – €100,000).
- Additional Serious Illness Cover
If you make a claim on Additional Serious Illness Cover, the amount paid out does not affect your life cover benefit. The disadvantage of this option is that the premium is higher.
Fionn takes out a Guaranteed Term Protection Policy until age 84 for €200,000 Life Cover and €100,000 Additional Serious Illness Cover. Fionn is diagnosed with a serious illness covered by his policy. The life company pays out €100,000 for the serious illness. His Life Cover remains the same at €200,000.
It really depends on the client’s circumstances including your family health history and finances. It is cheaper to go for Accelerated Life Cover but if you make a claim, you are reducing the amount your loved ones would be paid on your death.
A Stand-Alone Serious Illness policy can be set up without any life cover. You can have add-ons such as personal accident cover and surgical cash cover. Talk about these with your adviser.
Be aware that not every serious illness is covered by every policy. Do make sure you talk this through with your adviser who will be familiar with the details. The insurance company will only pay out where the serious illness is listed of illnesses on the policy.
Don’t hesitate to call Marcus on 01 4587576/087 6735544 to discuss protecting yourself and your family from the stress of making ends meet if you are unable to work.
Marcus is a Certified Financial Planner® (CFP) and Qualified Financial Advisor (QFA) with over 10 years’ experience in Financial Services. He received a B.Sc. (Hons) in Applied Mathematics from Maynooth University in 2007 and completed the QFA in 2009. Marcus went on to obtain the diploma in Retirement Planning Advice (RPA) in 2013. In 2017, Marcus received a 1st Class Honours in the Graduate Diploma in Financial Planning and passed the CFP® (Certified Financial Planner) exam. He has gained valuable experience in New Ireland Assurance and Zurich Life. Marcus joined Clear Financial in July 2017.
MB Planning Ltd. T/A Clear Financial is regulated by the Central Bank of Ireland.