If there is one aspect of protection that crops up time and time again, it’s Serious Illness Cover (a.k.a. Critical Illness Cover or Specified Illness Cover) but not always for the right reasons! Quite often, the topic comes up because someone has received unpleasant medical news and it prompts them to consider the “what if” scenarios. Sadly, in many cases, it is too late at this point to be permitted to take out Serious Illness Cover. The usual medical underwriting that takes place when someone applies for cover is more stringent on Serious Illness Cover than it is for say, Life Cover. The reason is that you are far more likely to be diagnosed with one of the Specified illnesses during the term of a plan than you are to pass away.
So what exactly is Serious Illness Cover and why is it so important? The cover will pay out a tax-free lump sum on diagnosis of a large number of Specified Illnesses. While the list is quite long, the vast majority of claims are for the “big 5”, Cancer, Heart Disease, Stroke, Multiple Sclerosis and Loss of Independence. It is not dependent on your ability to work or the severity of how you are affected. If it is one of the definitions covered, you are paid. (My own plan paid out less than a year after I commenced it, for being diagnosed with a cancerous tumour, despite me returning to work less than 2 months after surgery and doing radiotherapy on my lunch hours! Thankfully, I am over a decade clear.) While obviously, the impact different illnesses can have on you can vary greatly, there will usually be some degree of financial loss, from a stint of not being able to work, to life-transforming changes. Despite the fact that in Ireland, you have a 1 in 4 chance of being diagnosed with one of the covered illnesses before age 65, there is still a culture of “It’ll never happen to me” (see previous blog of this title.) As we head towards 40,000 new cancer cases in Ireland every year, people still think nothing bad will ever happen to them. At group talks, I often ask if anyone present has had close friends or family affected by cancer? I have NEVER, had a hand not raised!
For some reason, despite vast amounts of information on the topic, it would appear that many people still do not understand Serious Illness Cover. And as we often avoid what we don’t understand, it leads to apathy around the topic and hence, gets put on the long finger. I often review client’s financial planning and see that they have their house insured, their furniture insured, their pets, smart phones, lap tops and holidays insured. But they don’t have themselves insured. Another misconception is how expensive it is. Cover can be put in place for less than the cost of a takeaway each month. Yes, it is possible that you may never claim on your cover (likewise your pet insurance, holiday insurance and home insurance) but it’s better to have it and never need it rather than need it and never have it. As it’s not compulsory, it’s not usually something that people seek out for themselves, until, that is, something impacts on them, whether it is themselves or someone close to them. At an information stand I was present at, not too long ago, the only people that actively approached to ask questions about the cover were cancer patients, heart disease patients and a transplant recipient. Unfortunately, it was too late for all of these people to get cover for themselves. The best time to consider Serious Illness Cover? Is when you don’t think you need it! At the very least, get a free quote for cover from someone who is independent and can quote the premiums of a number of companies. It’s quick and easy and you can then make an informed decision for yourself. Saying that you’ll “look at it” at some point in the future? (See blog entitled “5 Excuses Made to Avoid Financial Stuff”) All you’re doing is putting something off so you don’t have to deal with it now. If a covered event happens, you’ll be glad you did deal with it!
Dave Kavanagh QFA has been a Financial Adviser for over 20 years (and a Gym Instructor/Nutrition Adviser before that!) He has done advice slots on RTE 2FM and on TV3 and does the “Ask the Expert” Financial Advice section on Mumstown.ie For more information on this topic, just send an email and remember, with Financial Companion, there is no cost and no obligation to arrange a review. Contact us to find out how simple it is.