How much critical illness cover do I need?

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Critical illnesses can be life-changing and may result in permanent symptoms, disabilities, or require major surgery such as an organ transplant.

LV= covers a wide range of illnesses and conditions, although if you have a policy with us, you may find you’re already covered for some critical illnesses already. It’s important you check your policy conditions so you know exactly what you’re covered for.

Whether you receive a medical diagnosis or go through a life-changing accident, your critical illness policy could supplement lost income and help your family and loved ones through a difficult time.

Our life insurance with critical illness cover

If the worst happens to you, life insurance with critical illness cover pays a lump-sum payment to protect your home and family. It can also cover the cost of medical care, home improvements and adjustments arising from your condition.

How do you know how much critical illness cover you may need?

While there’s no “right” answer, there are a few steps you can take to help you understand how much critical illness cover you might choose to get. Consider how you would support your family or pay the bills if something were to happen to you, and whether life insurance with critical illness could help you and help to alleviate the financial stress for your loved ones or dependants.

The following considerations should be made: 

• How your regular outgoings will be maintained.
• How having a serious illness might affect you and your family, especially financially.

These two considerations will help you start to determine how much cover you should consider getting.

As well as the above considerations, you should also consider:

1. Your regular monthly income, including any benefits, dividends, or other assets you may have.
2. Your current monthly outgoings, from essentials to nice to haves.
3. Any future potential changes to your monthly outgoings, such as a mortgage being paid off, or helping your children with university fees.
4. How much you have in savings and assets that you would be willing to use to potentially cover any financial shortfall. 

What type of critical illness cover should I get?

Critical illness cover is mostly taken out in combination with a life insurance policy.

There are two types of critical illness cover: level term and decreasing term. Which one is best for you depends on your financial situation and what you’d like the policy to cover. 

What factors should you consider when taking out critical illness cover?

1. Your home

Your property is one of the biggest investments of your life and worth protecting. If you were to die or suffer a serious life-changing illness or accident, it will be a big help to you and your family if the mortgage was paid off.

Similarly, if you rent, consider how much you’d need to cover your rent, plus any potential increases that may be in your contract. While it’s hard to know exactly how much you may be paying in rent in years to come, you could apply an estimated increase every year to help you figure it out. 

2. Your children

If you have children, you already know that they impact your monthly expenses, and the bills may get bigger if they want to go to university. Consider how much they cost you to raise them to adulthood, and if you want any potential education fees included. If you’ve already got older children, what about their children, or helping to set your family up for life?

If you fell seriously ill, would you need to pay for additional care and support for your children, or would you need to move somewhere more suited to your condition? Similarly, you may want to consider whether they need any mental health support during your illness, as that can often incur an additional cost.

3. Medical expenses

Even if you rely fully on the NHS, there can be associated expenses such as travel for treatment, alterations needed for your home, care assistance or even employing someone to help with tasks you can no longer do yourself.

This may also include alternative therapies or additional remedies, such as counselling, massage, chiropody or others that you find helpful in your recovery, even if your GP hasn’t prescribed them.

4. Think about the help you already have

If you have any assets such as savings, you might decide to use some of these instead to help provide a safety net should you be diagnosed with a serious illness. If you do, you could then reduce the amount of cover you think you’ll need by this amount.

Other insurance policies you have, such as income protection insurance, as well as any work-related benefits, could also be taken off too. You may also decide to consider reducing the cover you need by the amount of state benefits you’re entitled to in the event of ill-health.

Depending on what diagnosis you receive, you may be able to claim certain state benefits either permanently or for an extended period. Whilst they can provide additional income during a tough time, there’s no guarantee they’ll be available to you at the time, so that’s worth bearing in mind.

How much could I be paying for critical illness cover?

This very much depends on your personal circumstances, and certain factors affect what you might pay for critical illness cover, such as:

• Your age: The older you are when you take out a critical illness policy, the higher your monthly premiums are likely to be.
• What you do for work, as riskier jobs may be more likely to incur a higher monthly premium.
• Any health and lifestyle factors, such as family medical history and whether you smoke.

Each critical illness application is reviewed with all circumstances taken into consideration.

So how much critical illness cover should I have?

You may want to have as much cover as you have life insurance, as this provides the same level of cover for multiple circumstances, but critical illness cover can get more expensive very quickly. So, you could decide to reduce the amount of critical illness cover to meet your budget. After all, some critical illness cover is better than none. It’s up to you to decide what’s affordable, and if you’re unsure, speak to a financial adviser about your life insurance and critical illness cover options.

How you receive critical illness cover payments

If you need to claim on your critical illness insurance policy, you’ll usually receive the payment as a one-off lump sum. This will help you to pay for any immediate costs, as well as helping towards any longer-term costs, whilst you adjust to life following your diagnosis or undergoing surgery.

Here at LV=, we only offer critical illness cover in conjunction with life insurance, although other providers may offer this as a separate policy on its own.

It’s up to you to decide how much cover you need and you should also make sure it’s affordable, so your cover can stay in place when you may need it most.

What if I want to increase my critical illness cover? 

There may come a time when you’d like to increase your critical illness cover. Your circumstances may change due to certain life events, such as getting married, starting a family, buying a home or moving jobs.

Many life insurance with critical illness policies come with a guaranteed insurability option or milestone benefit that enables you to increase your level of cover at some point in the future. This ensures you have adequate financial protection in place during the policy term to account for a change in your circumstances.

If you’re eligible, your provider won’t require new medical details, and your premiums will increase in line with your new cover amount. Check your policy conditions for more information on the eligibility and amounts you can increase your cover by.

What if I really don’t know how much critical illness cover I need? 

If you've thought about all these things and are still unsure, you should speak to your financial adviser, who will consider your individual circumstances and run through your options. You can also call LifeSearch, who we've chosen to offer customers independent financial advice for protection products.