The Basics: Critical Illness Insurance

Critical illness insurance provides you with a lump sum cash pay out in the event that you develop a serious illness or disability. These insurance policies only cover long-term and serious illnesses that will affect your ability to work. Such illnesses or disabilities include heart attacks, strokes, loss of limbs, cancer, multiple sclerosis or Parkinson’s disease. The lump sum provided by the insurance policy can be spent however you may require. From paying off your mortgage to taking care of your household’s immediate financial needs, you are free to spend it as you desire. Critical illness insurance policies are quite specific about the conditions and eventualities they cover. Thus, you’ll usually have to be very seriously ill or completely incapacitated by illness for you to claim on the policy. Moreover, with the expensive nature of premiums combined with the fact you may never receive a pay out, the real question is whether critical illness cover is the right choice for you.

Is critical insurance cover for me?

If you are affected by long-term illness or disability, state benefits may not be enough to sustain your lifestyle. Depending on your eligibility, the government’s Employment and Support Allowance will only provide you a maximum of £100 per week. This too depends on the nature of your illness, disability or incapacitation from work. If this is not enough for you to survive, critical illness cover may be a worthwhile option. Furthermore, you should assess the extent of your savings and how long they might last, in case you fall ill. Should you not have an ample amount of savings, critical illness cover is definitely worth considering. Also, perhaps your employer makes provisions for extended sick periods. This is another thing worth checking, before considering critical illness cover.

Income Protection Insurance

Income protection insurance is designed to cover your expenses in the eventuality that you are unable to work due to sickness, injury or disability. It can protect your income until retirement, death or your return to work. Income protection is one of the most overlooked and undersold forms of insurance cover available on the market. Simply put, people tend to adopt an “it won’t happen to me” approach, when it comes to safeguarding their income.

What would you do if you were unable to work tomorrow? How long would your savings realistically last? Is your household income, without your contribution, enough to cover your financial commitments? Does your work contract offer any provisions if you are sick for the long-term? How much will statutory sick pay help you? In short, income protection is vital for people of all ages. With only a small fraction of employers supporting employees who are sick for the long-term and as state benefits dwindle, you may find yourself high and dry, all of a sudden However, there are so many options available that we’ll start by introducing some of the basic terminology.

Short-Term Income Protection – These policies are the cheapest available on the market and represent the budget option. They offer a short-term pay-out period, which can last between 2 and 5 years. Some insurers refer to these as Accident, Sickness and Unemployment (ASU) policies. They largely come under three categories: mortgage payment protection insurance, payment protection insurance and income protection insurance.

Long-Term Income Protection – While long-term income protection policies are comparatively more straight forward, there are still a few distinctions that exist between individual policies. Some policies, referred to as “own occupation” policies, will pay out if the policyholder is left incapable of doing any part of their job. Other policies, known as “working tasks” policies, will only pay out if the policyholder is left unable to conduct day-to-day living tasks.

 

Level Term Life Insurance

As we’ve briefly mentioned in the previous post, level term life insurance pays out a set amount of money to your dependants, if you die during the term of the policy. Here, we’ll be taking a closer look at this most comprehensive form of life insurance cover.

Benefits

In the unfortunate event of your death, level term life insurance will help your remaining family members cover the costs of mortgage payments. This is the most common purpose for which people take out this form of life insurance. Setting the term of the insurance policy the same as the mortgage will guarantee that the policy is enough to cover your mortgage. One of the biggest benefits of this is that the later the insurance is paid out in the term, the lesser the amount of the mortgage to be repaid. Thus, your family will be left with a paid off mortgage and cash to spare. Although mortgage repayment is a major purpose of this form of cover, the policy’s cash can be used to pay off other debts. Or, you may simply want to leave your family with lump sum, to spend how they will.

Costs

The cost of life insurance depends largely on medical factors and lifestyle choices. Medical factors include any illnesses you may have or may have the propensity to develop. Thus, familial medical history also comes into play, when insurers are calculating your risk for life insurance. Asthma and heart problems top the lists, when it comes to what insurers are looking for here. Lifestyle choices include habits that affect your health. As you’re probably aware, cigarette smoking habits and alcohol consumption will both dramatically increase the cost of life insurance premiums. Dangerous high-risk hobbies, such as sky diving, and high-risk occupations will also drive up the cost of your life insurance.

Life Insurance

There are many options available to you when it comes to life insurance. From mortgage protection packages, to safeguarding your dependants’ interests and others designed to offset the cost of inheritance tax. Life insurance can be confusing. Some options offer a lump sum to your dependants when you die. Whereas others will pay out regular payments upon your death. With Insurance Finance Talk, take the stress and hassle out of choosing the right life insurance for you. We’ll start with the simplest form of life insurance, which will provide for your dependants, if you or your partner die.

Level term life insurance

Level term life insurance refers to policies that pay out a set amount of money regardless of when you die, as long as your death occurs during the term agreed to. These policies guarantee a lump sum pay out to dependants upon your death.

Other types of life insurance

Income protection insurance – If you find yourself unable to work due to injury or sickness, this solution will provide you with regular payments to help manage your costs.

Critical illness insurance – If you’re diagnosed with a serious illness, that is covered by your particular policy, you will be given a tax-free lump sum. It’s important to note that this will only be given if your illness is covered by your policy.

Payment protection insurance – If you’ve been made redundant, forced out of work due to injury or are deemed to ill to work, this form of insurance will help you maintain your payments.

Short term protection insurance – If you find yourself unable to work, or out of work, this solution will help you with essential payments, for a limited amount of time.

Is pet self-insurance a viable option?

Now that we’ve trawled through the various pet insurance options available and come across some of their pros and cons, the question arises, do you really need a pet insurance policy? With lifetime cover not entirely what it seems and the increasing cost of premiums, is there another option? While there are several options and ways to ensure your pet is taken care of, in this post, we’ll take a look at self-insurance.

What is self-insurance?

Put simply, self-insurance is when you save a set amount of money regularly, to be used to pay for potential veterinary bills. Of course, the amount you choose to set aside will be determined by your budget and what you can afford. Instead of spending money on expensive premiums and not claiming any amounts back for healthy pets, self-insurance gives you an option. You could keep hold of your money and develop a fund while your pet is young and healthy, to pay for illnesses and problems in old age. Over the course of several years, this fund could grow to be quite substantial.

What are the pitfalls of pet self-insurance?

The first thing to consider is the risks your pet carries. Between species and breeds, some may be more likely that others to develop illness, congenital diseases and hereditary conditions. While, others may be more likely to be stolen. Furthermore, veterinary bills can be expensive and appear suddenly. Depending on where you’re up to with your self-insurance pot, you may not have the funds immediately available to cover vets’ bills. Thus, you may be jeopardising the wellbeing of your beloved pet. Additionally, if your pet develops a chronic condition, it could easily cost you thousands of pounds. At that point, it will be almost impossible to get pet insurance.

Lifetime Pet Cover – Is it really worth it?

Touted as the gold standard in pet insurance, lifetime pet cover has come under scrutiny in recent years. With technological advances and the rising cost of veterinary fees, pet owners seeking peace of mind have poured millions into the comprehensive cover policies. However, following a surge in complaints to the Financial Ombudsman Service, lifetime cover policies have fallen under greater scrutiny. Concern has arisen as to whether policies have been inappropriately marketed by insurance providers to consumers. Furthermore, the situation is such that the Financial Ombudsman has referred these concerns to the Financial Conduct Authority. This comes after a warning had been issued to insurers in November 2017.

As discussed in previous posts, lifetime pet cover has been sold on the basis that a pet’s treatment costs would be covered by the policy for as long as the premiums were paid. Such policies would cover accidents and illnesses, irrespective of the pet’s age. However, consumer complaints have shown that this is not the case. In response to aging pets and increased healthcare costs, insurers have increased premium costs. Increases have been hiked to such an extent that premiums have spiralled to many times more than the originally agreed policy costs.

A couple from Northampton, who own two bichons frises, took out a lifetime cover policy with MoreThan. From when they were puppies, eleven years ago, the policy promised lifetime cover for the treatment of all medical conditions, up to an annual limit of £12,000. However, they were recently informed that their annual premium would multiply threefold to £7,410. The insurance provider argued that the price increase was warranted by the pet owners’ claim history and the age and medical history of their dogs.

Being a high-claim and low-yield product, lifetime pet cover is becoming hard to find. With consumers seeking peace of mind, providers seem to be exploiting the situation. Increased premiums are simply pricing consumers out of the market.

Follow our blog for more information on how to best insure your pet.

The Basics of Lifetime Pet Cover

In this post, we take a closer look at the most expensive form of pet insurance, lifetime pet cover. Lifetime pet cover is the most comprehensive form of pet insurance and the costliest. With some variance among insurance providers, lifetime pet cover offers protection through a wide range of illnesses and injuries. Lifetime policies account for chronic and recurring conditions, while non-lifetime policies do not provide cover for pre-existing or age-related conditions. In this way, lifetime policies may offer pet owners more peace of mind than non-lifetime policies, such as accident only, specified conditions and time limited policies.

Lifetime pet insurance policies come under two categories and are termed “annual limit per condition” and “condition limit.”

Annual Limit Per Condition – These policies offer pay outs for veterinary expenses up to an agreed limit for any condition that your pet may develop. For example, if your dog develops diabetes and your limit is £10,000, then you will be entitled to claim back expenses worth up to £10,000. Similarly, if during that same period, your pet dog also develops arthritis, you will be able to claim back up to £10,000 of payments made towards treating this second condition. Thus, the £10,000 pot resets with the emergence of each new condition and is available for a year’s duration.

Condition Limit – These policies set a lifetime limit for each condition your pet may already have or may develop. Thus, if the policy agrees to a lifetime limit of £25,000, the policy holder can claim up to £25,000 of expenses made towards treatment of a condition for as long as the policy is renewed.

Advantages of Lifetime Cover

If you have a pet which suffers from a chronic or recurring condition, lifetime insurance cover offers the best solution. Providing continual cover and high limits, you can rest assured that your pet’s treatment costs will be covered.