Will you be able to pay your utility bills or meet your mortgage or loan repayments? Can you afford the best medical care? Could your diagnosis have an impact on the day to day lives of your family in such areas as childcare or education?
Specified Serious Illness cover pays a tax-free lump sum in the event of you being diagnosed with one of the specified illnesses listed in your insurance policy. Although the number of illnesses covered by all insurance companies is extensive, 90% of claims are for cancer, heart attack or stroke. Illnesses or procedures such as angioplasty for heart disease, benign brain tumour, coronary artery bypass, multiple sclerosis or Parkinson’s disease account for the next highest percentage of claims paid.
As Specified Serious Illness Cover pays a lump sum – as opposed to an income – on diagnosis, Jameson Financial also recommends that some level of this type of cover is taken out in conjunction with Income Protection insurance. The reasons are straightforward: Specified Serious Illness cover is paid on diagnosis of a Serious Illness and is not dependent on your ability to continue in your usual employment. Therefore, once your diagnosis meets the definition of the illness covered, the claim is paid immediately irrespective of whether you are absent from work. In such a way, Specified Serious Illness cover can dovetail with your Income Protection policy in that your lump sum payment can offer financial protection during the ‘deferred period’ (see Income Protection Insurance on this website).
Factors to consider
If you take out a Specified Serious Illness policy today, the premium will be guaranteed to remain fixed for the duration of the contract – this is really worth considering, as when you are older, the chances of being diagnosed with a Specified Serious Illness is greatly increased.
Studies have shown that one to three years of net income can greatly lessen your financial problems in the event of being diagnosed with a Specified Serious Illness. In such a way, the level of cover you require – and the cost – may not be as high as you think.
You are nearly three times more likely to be diagnosed with a Specified Serious illness than to die prematurely. So, when you are taking out Life Insurance, consider adding some level of Specified Serious Illness Cover.
When selecting the Specified Serious Illness policy or company, do not be swayed by the extensiveness of the list of illness covered. At Jameson Financial, we carefully examine the definitions of the illnesses covered and make our recommendations largely on that basis. For instance, a broader definition of what constitutes a ‘heart attack’ will probably serve you in much better stead than cover for some obscure or rare illness that you are very unlikely to contract.
Take out cover when you are in good health. Don’t wait until your doctor tells you that you have high cholesterol or elevated blood pressure. These, often routine, conditions will not necessarily mean that you will be declined for cover, but you will face higher premiums.