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How Much Critical Illness Cover Do I Need?

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What does Critical Illness Cover?

Critical Illness Insurance protects against the risk of you suffering from a serious illness or injury as per the insurers policy wording.

In the event of you becoming critically ill, you receive a cash lump sum from the insurer. The most common claims are for:

  • Cancers
  • Heart attacks
  • Strokes

Other serious conditions typically covered include multiple sclerosis, Parkinson’s, organ failure / transplant, motor neurone disease, loss of limbs, permanent blindness and irreversible deafness.

How Much Critical Illness Cover Do I Need?

How much Critical Illness Insurance you really need depends entirely on your circumstances.

Someone with an outstanding mortgage would naturally start by looking to cover their mortgage balance however this is unlikely to be a suitable amount of cover.

What would happen if the serious illness left you too ill to work at all?

Bills, groceries and other living expenses will continue to pile up without a regular income to meet them. It’s therefore usually sensible to have some cover over and above your mortgage to maintain your lifestyle if you can’t work.

Paying for private medical treatment

Cancer drugs in particular are incredibly expensive – some so much so that they’re not typically recommended for use by the NHS and are only available privately.

For instance, in 2018 two drugs that were approved for use by the NHS that were previously not used due to cost included Kymriah, an immunotherapy drug for the treatment of blood cancer, and pembrolizumab, a lung cancer treatment.

A single course of Kymriah costs £282,000 and pembrolizumab costs £84,000 at full list price.

If you had to fund these yourself because they weren’t available on the NHS but your consultant thought they may benefit you, this would clearly be hugely expensive. A Critical Illness Insurance payout could be the financial lifeline you need to fund such treatment.

Working Out How Much Critical Illness Insurance is Enough

How much cover you need will really depend on your personal circumstances and your budget.

You can use the payout from a Critical Illness Insurance policy however you wish. However, the most common financial commitments and additional costs that you may want to consider covering include:

  • Paying off mortgage and non-mortgage loans
  • Meeting general living expenses (bills, rent, groceries, school fees) if you can’t work
  • Adapting a home to accommodate a new disability (e.g. installing an accessible bathroom or a wheelchair ramp)
  • Buying other disability equipment
  • Paying for medical / nursing care
  • Covering private medical expenses if there is a treatment you could benefit from that’s unavailable on the NHS.

You might be able to use savings or other assets to fund some of these expenditures, which could reduce the amount of Critical Illness Insurance you need.

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You may also be entitled to government incapacity benefits, which could help provide some form of income into your household if you can’t work.

When talking to clients we often recommend combining a level of Critical Illness Cover with an Income Protection policy.

The Critical Illness Insurance will take care of any outstanding loans whilst the Income Protection will make sure you can meet the regular monthly expenditure which will continue regardless such as utility bills, council tax and groceries.

Michael Barrow
Independent Protection Expert

Income Protection or Critical Illness Cover?

Although a lump sum payout can be incredibly useful if you’re off work, it can be hard to work out just how much Critical Illness Insurance you really need when it comes to covering all your potential expenses.

  • Do you need funds to cover your outgoings for a few months or a few years?
  • What if your illness was so severe you could never work again?

Covering lost income with Critical Illness Cover can be prohibitively expensive

The average UK worker earns approximately £30,000 per year.

If a 35-year-old became so ill or injured they could never work again, they’d need £900,000 as a lump sum just to cover lost wages to see them through to retirement at 65.

This is before considering any ‘extra’ cash on top of replacing wages, such as for repaying an outstanding mortgage or covering private medical treatment.

How much does £900,000 of Critical Illness cost?

Premiums for £900,000 of Decreasing Life and Critical Illness Insurance for a healthy 35-year-old would be around £210 per month – is this a realistic monthly cost?

Is Income Protection more suitable?

It’s here Income Protection can step in to provide valuable cover and greater certainty.

Income Protection is designed to pay out a proportion of your gross income each month if you suffer an accident or sickness that renders you unable to work.

The best policies will pay out indefinitely, so if you were told you could never work again you’ll keep receiving a monthly income from the policy right up until the cease age (usually set to your retirement).

To work out how much accident and sickness insurance you’ll need you simply take your core monthly outgoings such as:

  • Mortgage / Rent
  • Council Tax, Utilities and other bills
  • Groceries
  • Vehicle running costs,
  • School fees etc.

Add them together and this forms the level of monthly income you’ll need hitting your bank account to maintain your lifestyle while you cannot work due to illness or injury.

For more information read our Income Protection vs Critical Illness Insurance guide.

 Sam Barr-Worsfold Independent Protection Expert at Drewberry

Income Protection can be seen as more comprehensive than Critical Illness Cover because there are no preset conditions you need to meet to secure a payout.

The threshold for an Income Protection claim is simply anything that medically prevents you from doing your job.

Sam Barr-Worsfold
Independent Protection Expert at Drewberry

Need Critical Illness Insurance Advice?

Setting up the most suitable Critical Illness Cover particular when it comes to getting the right level of cover can become both confusing and time consuming. If you need some help then please don’t hesitate to get in touch.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

  • There is no fee for our service
  • We are independent and impartial
    Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
  • We’ve got bargaining power on our side
    This allows us to negotiate better premiums for you than you going direct yourself.
  • You’ll speak to a dedicated expert from start to finish
    You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
  • Benefit from our 5-star service
    We pride ourselves on providing a 5-star service, as can be seen from our 2419 and growing independent client reviews rating us at 4.92 / 5.
  • Gain the protection of regulated advice
    You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
  • Claims support when you need it the most
    You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.
Samantha Haffenden-Angear

If it is all getting a little confusing and you want to talk through your options to make sure you find the most suitable cover please don’t hesitate to get in touch.

Pop us a call on 02084327333 or email help@drewberry.co.uk.

Samantha Haffenden-Angear
Independent Protection Expert at Drewberry

I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.

Brendan Kelly
26/09/2019
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Or call us on 0208 432 7333

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