We all have many claims on our hard-earned salaries and we obviously like to get the best value from whatever we buy, so many of us don’t see the true value of something like critical illness insurance – until we need it.
When we are young we think we are invulnerable and nothing’s going to happen to us. As we grow older it’s a thing we don’t like to dwell on, but the reality is inescapable.
Recent figures show that half of us will end up having to cope with cancer of one form or another in our lifetime. About seven million will develop heart and circulatory disease, resulting in 545 people each and every day being rushed into hospital for treatment.
Heart attack survival rate these days is much better than it was back in the 1960s when seven out of 10 were fatal. Today seven out of 10 survive. But though they are surviving, they are still very ill and have to quit working – at least for a time.
The effect on household finance can be devastating, as can the effects of any other major illness. Figures from the Centre for Economic and Social Inclusion (CESI), which were produced for the Association of British Insurers (ABI), reveal that more than 60% of working families would lose over a third of their income and four in ten would see their income slashed by more than half.
To make matters worse, many of them don’t have much to fall back on. A Legal & General survey reveals the average household could last jut 32 days on their savings. A quarter of those surveyed admitted their savings would last just one week or less.
But that’s not all. The Macmillan cancer charity found that on average cancer sufferers lose £860 a month in income, but their monthly outgoings shoot up by an additional £270 with travel costs for appointments, hospital parking, increased heating bills and over-the-counter or prescription medicines.
So why don’t people make extra provision to protect themselves and their families if the worst should happen, like taking out a critical illness policy?
Research has shown that, if they have even thought about it at all, many have over-estimated how long their savings will last and how much they will receive in benefits from the government.
Craig Brown of Legal & General says one of the biggest barriers to people taking out a policy is a lack of confidence that a policy will deliver when they need it which is ‘totally at odds with the facts.’
He said: “In 2016 Legal & General paid almost 93 per cent of its critical illness claims – claims that totalled £181m.”
The range of policies can sometimes be confusing because they have to state what is and isn’t covered.
Said Craig: “For most insurers, cancer, stroke and heart attacks account for approximately 80 per cent of all their critical illness claims.
“Add in other major illnesses which clients will have heard of, such as such as multiple sclerosis, Alzheimer’s and motor neurone disease, and you’re getting closer to 90 per cent of all claims.
“Advisers have a responsibility to make sure they explain the options well to clients.
“That means not just understanding the cover, but understanding what the client’s demands and needs are, as well as what they are looking to protect.
“Is a lump sum on a diagnosis going to provide what they need? Or would income protection be more appropriate? If they can clear the mortgage with a critical illness policy, what will they live off?
And what about cost?
These days money is tight in many households, but critical illness cover is available from as little as £5 a month and will pay out a cash sum if you are diagnosed with one of the critical illnesses named in the policy.
The amount of money paid will depend on the premium you decide on and the type of policy you have chosen.
We can help
If you are considering taking out a critical illness policy our friendly, knowledgeable staff can help guide you through the process and ensure you find just the right policy for your particular needs.
Just give us a call on 01925 552 327 and we’ll be happy to help.