A Guide To Standalone Critical Illness Cover

It’s no wonder so many people are looking into buying Critical Illness Cover.

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It’s no wonder so many people are looking into buying Critical Illness Cover. When you fall ill with a serious health condition and left unable to work, the last thing you want to worry about is your financial security, especially when your priority should be focusing on your physical wellbeing. Critical Illness Cover comes in at this point, helping to provide peace of mind and financial security. It covers a good many number of serious illnesses, providing a lump-sum payout so that if a critical condition stops you from earning a regular income, or indeed you need extra money to pay for private medical care, you have that financial relief to concentrate fully on recovering.

Critical Illness Cover comes in a few different forms, and is adaptable so that it fits with a variety of personal life-circumstances. The most common way one purchases this cover is together with a life insurance policy, however if you have a small budget with Critical Illness Cover being your primary concern, the cheapest way to be covered is via a standalone Critical Illness policy.

It is important to be aware of all the options however, and not just go with the lowest-priced option. In many cases, a combined life insurance critical illness cover will not cost much more relative to the extra financial protection it provides to you and your loved ones.

As mentioned however, everyone’s life-circumstance and budget available is different, so whichever option you’re leaning towards, it’s important to know all the facts before taking the plunge. Here we will look at whether standalone critical illness cover is for you or not.

What is standalone critical illness cover?

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For most buyers, Critical Illness Cover is purchased alongside Life Insurance, and indeed when searching online for Life Insurance, it is a common option to add to your Life quote. However, just as you can purchase Life Insurance without Critical Illness Cover, you can also buy coverage for Critical Illness as a standalone coverage.

Standalone Critical Illness Cover is a policy that covers any critical illness diagnosis (as listed by the insurer) that is purchased without it being part of another type of insurance, such as life insurance. Life insurance will pay out on the death of the policy holder, but not necessarily on the the diagnosis of a critical illness such as cancer, a brain tumour or a severe cardiological issue. As long as you have obtained the right insurance policy, Critical Illness cover will provide a lump sum payout on the diagnosis of the above and other conditions.

What’s the best standalone critical illness cover?

Just as all of us find ourselves in different personal circumstances and financial situations, so can Critical Illness Covers meet contrasting lifestyles and budgets. That being the case, the question of which standalone critical illness cover is the best is completely dependent on the individual. One particular insurer and their product offering might be an ideal fit for one policyholder, but ill-suited to another.

For example:

  • If you are young, without dependents, and with lower monthly expense commitments, then you might want to purchase a more general Critical Illness Cover which is less expensive but still provides a broad coverage offering.
  • If however you have had a particular medical condition, you might want to look into a more particular policy which is specific to your own concerns. In that case it might be wise to speak with a qualified expert in this area to ensure your needs are being met.

Should I get critical illness cover without life insurance?

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Whether one should purchase Critical Illness Cover as a standalone product or combined with Life Insurance comes down to the individual. Both Life Insurance and Critical Illness Cover are bought as a means of financial protection so that in unfortunate times your bills, mortgage, and any other financial outlays will be met, and dependents taken care of. If you have a smaller set of financial responsibilities, with less capital available for monthly premiums, and are not necessarily as concerned about purchasing life Insurance, then perhaps standalone Critical Illness Cover is for you. It is important to remember that a standalone critical illness policy will respond differently to that combined with Life Insurance, and can come with the condition that if you are diagnosed with a serious health condition and die within a certain number of days (usually 14 – 30), you get no payout.

If you do go down the path of a standalone purchase therefore, you have to make sure it works for you. Not only that, but you must disclose your full medical history and lifestyle in your application so that if a claim is made, there is no risk of it being denied on account of any errors or omissions in your initial application.

Of course, if you have any queries on what personal information will be needed, and also what circumstances will trigger your insurance policy, do not hesitate to seek further advice from experts in this field.

Standalone vs Combined Cover

Standalone Critical Illness Cover will tend to be cheaper than purchasing a Combined policy with Life Insurance. However, some insurers will allow certain tax benefits in association with a combined policy that they don’t with a standalone one. For example, a key benefit of some offerings is that upon payment of claim, you are allowed to place your lump-sum payout into a trust which could mean it isn’t subject to inheritance tax. So whilst the initial outlay might seem more expensive on combined cover, the back-end sees it as a more cost-effective option.

Of course another key benefit of purchasing combined cover is that if you are more risk averse in nature, you will be more protected under a combined Life Insurance and Critical Illness Cover for whatever life throws your way.

Existing Life Cover

If you have existing Life Insurance and are looking to purchase additional Critical Illness Cover, it might make sense to begin your search with your current provider. They should have your personal details on file already (don’t forget to mention if any significant changes have taken place) and will be able to put you in the right direction on how best to proceed. If you still have questions, there are further experts available to give you the guidance you need.

FAQ on Standalone Critical Illness Cover

Standalone critical illness cover is an independent policy that provides protection against specific critical illnesses only, whereas integrated cover combines critical illness protection with a life insurance policy. With standalone cover, you receive a payout if you’re diagnosed with a covered illness during the policy term, while integrated cover may pay out for critical illness or upon death or terminal illness, depending on the policy’s terms and conditions.

The cost of standalone critical illness cover depends on several factors, including your age, the amount of cover, your health and wellbeing, lifestyle, the policy’s length, and your smoking status. Insurers use these factors to determine the level of risk you pose and the likelihood of a claim being made.

Children’s critical illness cover is typically available as an add-on to the main policyholder’s critical illness cover rather than as a standalone product. This additional coverage helps protect your children against specific illnesses and conditions covered under the policy.

A critical illness rider is an optional add-on feature that you can purchase alongside your health or life insurance policy, while a standalone policy is a separate plan providing full coverage for critical illnesses. Both options provide protection against critical illnesses, but a standalone policy offers more comprehensive coverage.

Yes, standalone critical illness cover typically pays out a tax-free lump sum upon diagnosis of a covered critical illness during the policy term. This lump sum can be used to cover health-related costs, monthly expenses, or lost income while you recover.

Some disadvantages of standalone critical illness cover include limitations in coverage (not all illnesses are covered), potentially higher premiums compared to integrated cover, and the fact that you’ll only receive one payout for a covered illness during the policy term.

It can be beneficial to have both standalone critical illness cover and income protection, as they provide different types of financial protection. Critical illness cover pays a lump sum if you are diagnosed with a covered illness, while income protection provides a regular income if you’re unable to work due to illness or injury. Having both types of coverage ensures more comprehensive financial protection during difficult times.

Standalone critical illness policies generally cover a range of serious illnesses, such as cancer, heart attacks, strokes, organ transplants, and neurological conditions like Alzheimer’s disease or Parkinson’s disease. However, the specific conditions covered vary between insurers, so it’s essential to review each policy’s terms and conditions to understand the coverage provided.

The payout process for a standalone critical illness policy varies depending on the insurer and the specific circumstances of your claim. Generally, once you have submitted all the necessary documentation, including medical records and proof of diagnosis, the insurer will review your claim. The payout process can take several weeks to a few months. It’s essential to contact your insurer as soon as possible after diagnosis to initiate the claim process and ensure a timely payout.