Terminal Illness vs Critical Illness
As regular readers of our blog, you will understand from a financial planning perspective that insurance is the foundation to a solid financial plan. Without protecting you & your family, there is little point in trying to build wealth. It could all come tumbling down quite easily at the stroke of serious illness or accident.
Perhaps think of personal insurance not as a policy, but as a financial expression of love for your family (credit to Alan Smith of Capital Partners for this one!).
But the insurance world is filled with as much jargon as the pension’s universe. This, understandably, causes confusion and a common one we see is the definition of terminal illness compared to critical illness.
The difference is huge.
Anyone is the profession will be reading this perhaps thinking the difference is simple. Which it is. If you KNOW there is a difference. So, let’s have a look:
A terminal illness is a disease or condition that cannot be cured and likely to lead to death.
What many people don’t realise is terminal illness is normally included on a life insurance policy. Yes, your life insurance can pay out a claim before you’re gone! This can be life changing, especially after such a devastating diagnosis.
The diagnosis normally needs to be less than 12 months to live, for a pay-out to be accepted by the insurance company.
If you live past this life expectancy, you’re not expected to pay anything back. Terminal illness isn’t normally paid within the final 12 months of your policy.
That’s it really. Quite simple.
Critical Illness Cover:
Critical Illness Cover, or CIC, is very different.
This covers many serious illnesses and pays a lump sum on diagnosis. The majority of claims are for cancer, heart disease and strokes. The condition needs to be fairly advanced for a claim to be paid.
CIC is far more expensive, as it covers many illnesses. Take a look at Aviva’s list of 53 critical illnesss covered.
Critical Illness Cover pays a claim at any point in your policy.
CIC is an additional benefit to life insurance, and you can add other benefits, such as children’s critical illness cover too.
Want to learn more about life insurance? Click here to read our 7 tips on life insurance
To discuss your family insurance needs, whether you’re based in Brighton, Sussex or further afield, call us today on 01273 076587 or email [email protected]
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This blog is for information purposes only and should not be relied upon for advice. Always seek regulated advice before proceeding