Critical Illness Cover Pay-out
As detailed within all of our guides on Life Insurance and Critical Illness Cover we explain that, when it comes to buying a long term protective Insurance cover for anything it is important to research thoroughly or use an FCA regulated broker. This is because each person is different and to ensure the best chance of receiving a claim pay-out if the worst happens, it makes sense to compare all of the providers. In today’s guide we take a look at critical illness cover pay-outs and when does critical illness cover pay out:
How Much Does Critical Illness Cover Pay-out?
Why A Critical Illness Policy Might Not Pay-out?
How Do Insurers Make Claim Payments?
How Much Does Critical Illness Cover Pay-out?
The purpose of a Critical Illness Cover policy is to provide financial protection if you are diagnosed with a medical condition that limits or stops your ability to work. After submitting a successful claim against your policy you can choose to use it to pay off your mortgage, replace a lost income, ensure your family and loved ones are looked after financially. Unlike Life Insurance which makes a payment to your family or loved ones, a Critical Illness Cover policy will make a payment to the policy holder allowing you to choose how to spend the claim payment.
When considering the best Critical Illness Cover for you and your family, deciding on how you receive a potential claim pay-out will need to be chosen. The most common choice is to receive a single claim payment from the policy to help with ongoing family outgoings. However, some providers offer ongoing monthly payments to policy holders to replace their monthly income.
Another important choice to make when obtaining a Critical Illness Cover is the type of premium payments that you prefer. Many policyholders choose to pay a regular monthly premium for the duration of the policy. However some prefer to pay an annual premium for simplicity, the key point to remember is that your policy needs to be affordable for the future to remain protected by a policy.
Each Policy Is Different
As mentioned above it is very important that research or assistance is very important when choosing the right policy. Some policies might not necessarily pay-out if you receive a diagnosis of a terminal illness that will shorten your life expectancy, although many polices do offer substantial protection for many different conditions and illnesses. It is important to note that a Critical Illness Cover policy not only offers protection for terminal illnesses, but also includes conditions that are recoverable. Each policy will differ slightly depending on the insurer you choose, by using an FCA regulated broker like Life Insurance Cover can help you to find and compare the best policies for you and your family.
Many UK Critical Illness Cover insurers provide protection for a core list of conditions and will usually make a claim pay-out on:
Benign brain tumour
Parkinson’s disease
Early-onset Alzheimer’s
The above list is not exhaustive and many insurers choose to offer protection for many more conditions. If you receive a diagnosis of one of the listed Critical Illnesses, provided you fully disclosed all of your medical conditions when taking out your policy, you should receive your Critical Illness Cover claim pay-out.
Why A Critical Illness Policy Might Not Pay-out?
Similar to a Life Insurance policy which will protect you and your family for the future, a Critical Illness Cover policy will offer further peace of mind. However, there are a few situations when a policy might not pay-out including:
Incorrectly completed paperwork when buying the policy
Non declaration of an existing illness that could be related to a Critical Illness diagnosis, when you took out the policy
Whenever you choose to take out a long term protection policy, such as Life Insurance or Critical Illness Cover it is important to pay close attention to the paperwork. Alternatively by using an FCA regulated broker, like Life Insurance Cover who can help you identify the potential paperwork errors as well as finding the best policy for you.
Can be the difference between buying the right level of insurance protection and receiving a pay-out if needed for you and your family, rather than having your claim refused due to a minor mistake in the initial application process.
How Much Will It Pay-out?
How much a Critical Illness Cover policy will payout after you have been diagnosed with an illness that is covered by your policy will depend on the level of protection you choose. The majority of people choose to take a Critical Illness Cover policy to make sure that larger and important costs, such as a mortgages and rent are protected.
The most common time that people choose to purchase a Critical Illness Cover is when they buy a family home to offer protection that will cover the entire mortgage. This could allow a successful claim to pay-out the full amount and the mortgage will be paid off.
There are few key points to consider when purchasing Critical Illness Cover which includes situations where a smaller payout may be made. A lower claim payment being made could be due to a variety of different factors, including if the illness is not determined to be as severe or debilitating as others. Alternatively you may choose to use your policy to pay for treatment of a child who falls ill with a Critical Illness, if the policy offers cover for children.
What Is The Average Critical Illness Cover Pay-out In 2020?
In 2020 many Critical Illness Cover claims were successful and policyholders received a claim payout, which made substantial difference to how they manage their Critical Illness. Figures from the Association of British Insurers (ABI) show that in 2020, 91.3% of all new Critical Illness Cover claims were paid out.
Looking further into the claims data a total of over £1.1 billion was paid to policyholders in 2020.
An average Critical Illness Cover payout in 2020 of a £67,011 per individual successful claim has been calculated by insurers and the ABI. However, some policyholders will have received more than the average and some policyholders will have received less, depending on the level of cover that they have chosen.
Finding out how much Critical Illness Cover you may need to ensure you receive the right claim payout in the event of a critical illness diagnosis, will either require a research or the expert advice from an FCA regulated broker. At Life Insurance Cover we can help make sure you choose the right cover with the best insurer for you and your family.
How Do Insurers Make Pay-outs?
If you receive a diagnosis of a Critical Illness and you have successfully submitted your claim against the policy, you can expect to receive your payout as a single lump sum or monthly income depending on your choice. How you choose to use a claim payment is entirely up to you, you may use to pay off your mortgage or to cover regular household living costs.
After you receive your claim payout, your Critical Illness Cover will cease to offer any further protection. It is important to remember that if you have purchased a combined policy with Critical Illness Cover and Life Cover, it will not protect you after a successful claim.
You are able to take out a new policy at any point, but as discussed in our other guides, it is essential that you disclose everything the application requests, including previous claims and medical conditions. If you choose not to disclose any important information, you could find any future claims are refused. From the 2020 claims data only 2% of claims received were declined due to non-disclosure of a medical condition, therefore it is important to inform the insurer of all potential conditions.
Speak With An Expert Today
After reading today’s guide, or if you have been considering your situation and think you might need Critical Illness Cover protection, our expert advice can help make sure you get the right policy for you and your family. An FCA regulated expert, like Life Insurance Cover, can answer any questions you may have, including when will a Critical Illness Cover policy payout?
To start a new policy or discuss any questions you may have, simply complete the quote form and speak with qualified and experienced Critical Illness Cover advisor from Life Insurance Cover.