Taking out critical illness cover is the right way to make sure that any unexpected sickness wouldn’t derail your financial planning and, more importantly, the way you and your family live. Although a critical illness policy should be of utmost importance, especially as we get older, few people know about the existence of critical illness insurance whilst others fall victim to misinformation.

Serious illnesses are one of those things that we can’t predict. Despite medicine’s evolution, a sudden health problem can cause many problems in our lives, especially when the problem affects the breadwinners of a family. Your medical history may be clear, but a critical illness could appear at any time.

What is critical illness cover?

Dr Marius Barnard founded the critical illness insurance policy in South Africa in 1983. In the beginning, the policy covered health conditions such as cancer, strokes, a heart attack and coronary bypass surgery.

Despite the fact that most people believe they are fully protected by a regular health insurance plan, the excessive costs of treating life-threatening illnesses are frequently far beyond the reach of many plan’s budgets. Critical illness insurance cover is your safeguard against any unexpected health condition. Such cover could reduce financial stress as well as the financial burden that your loved ones would have to face if you are unable to provide for them.

Most commonly, critical illness insurance products are defined as policies under which an insurer will provide a pre-determined lump sum cash payment to a policyholder who has been diagnosed with a critical illness specified within the policy.

What is covered by critical illness insurance?

As years passed, more illnesses and operations have been added to the scope of what critical illness insurance covers, such as Alzheimer’s disease, multiple sclerosis, Parkinson’s disease, major organ transplants, heart valve replacements, benign brain tumours, kidney failure and others.

It should be noted that not all critical illness policies cover the same illnesses. There are a wide variety of critical illness insurance products offered by multiple insurance providers. However, we suggest working with a financial adviser to find the right type of policy that offers you the best financial protection in case of an emergency situation.

Why should I take out critical illness insurance?

There are many reasons that could lead you to scrutinise critical illness insurance plans and choose to become a policyholder. A health problem such as a critical illness is likely to have a significant impact on your life as well as your loved ones.

Depending on the illness and its progress, you might have to suffer a loss of income, medical expenses and treatment costs that could put a strain on your available budget. Less money to cover your living costs would likely bring stress and uncertainty to your family as the additional medical costs could increase exponentially.

If you have a large savings account or a robust investment portfolio, there is a chance that you will be able to deal with living expenses. However, if you have not accounted for this in your financial plan, the consequences may be severe.

Critical illness cover for expats is something to consider – living and working in another country doesn’t mean that you’ll avoid being diagnosed with a serious illness at some point and having the cover in place can provide you with peace of mind.

Critical illness insurance can help you pay for expenses that are not covered by other types of insurance. Additionally, the money can be used to cover non-medical expenses associated with the disease, such as transportation, child care, and so on. The insured will get a lump sum payment to cover these expenses in most cases.

I have life insurance, do I need critical illness insurance?

Yes. When it comes to life insurance vs critical illness insurance policies, they will both pay a tax-free lump sum if an unexpected event happens. However, the event that triggers the payment is different – one is paid out on death, and the other on a diagnosis of a serious illness.

If you have life insurance, the insurance provider will make a one-off payment to your family if you die. This way, your loved ones will be able to cover the mortgage payments, rent payments, funeral costs or any other financial commitments they might have. Life insurance is a great option if you have people financially dependent on you as it enables them to cover most expenses.

Critical illness cover works in a different way. Your insurance provider will pay out if you are diagnosed with a serious illness, which may force you to stop working until you receive treatment and recover. And even then, we’re living so well with a permanent disability or terminal illness during modern times that your life may be changed forever.

Critical illness insurance is suitable for almost every individual who would like to secure financial freedom in the event of a sudden serious illness. The lump sum that you will receive can help you pay off debts and any health-related costs in case you decide to pay for private medical care in specialised hospitals.

Does critical illness insurance payout?

Yes. 91% of all critical illness claims were paid out in 2020 in the UK according to ABI. This amounted to over £1.2 million over the year with the average claim paying out £67,000.

The only reasons a critical illness policy would not result in a successful claim is that either the illness was not covered by the policy, or that not all relevant information was disclosed to the insurer when the policy was created. It’s really important to be honest and up-front when taking out insurance policies, as any discrepancies could result in claims not being paid, and monthly premiums being for nought.

How can I choose the right critical illness insurance?

Firstly, you will have to identify your needs and which level of cover would be in line with your budget and financial plan. Insurance companies offer many choices, but if you don’t know which product would be right for you, you may make a mistake. Such a mistake could cost a significant amount of money when you need it the most.

Critical illness insurance in the UAE

Holborn’s advisers are on hand to help you make the right choice, depending on your requirements. We have critical illness for expats specialists located in Dubai and across the UAE – Holborn has partnered with the top insurance providers around the world to offer you the best critical illness cover options. Get in touch with our fully qualified and experienced financial advisers to make sure that your health and the well-being of your loved ones are secured.