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CRITICAL COVER
I nearly lost my home after getting cancer but a £12-per-month policy saved us – check you’re covered too
Critical illness cover is a protection policy that pays out a lump sum if you are diagnosed with a serious illness
WHEN illness hit Carla Jefferson and husband Craig at the same time, the couple were worried they would really struggle financially and could even lose their home.
Carla, now 41, was diagnosed with stage three breast cancer five years ago at just 35 — and she needed ten months off from her work in financial services to recover.
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Just a few months later, Craig, 51, a self-employed singer, needed major heart surgery.
The couple, who live in Southampton with sons Harvey, 14, and Jacob, nine, were terrified about how they would manage.
It was not until a doctor asked Carla if she had critical illness cover that she realised she could make a claim on her insurance.
She had been paying £8 a month for cover through her employer Scottish Widows, while Craig paid £5 a month.
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They both received payouts of £50,000.
If the pair hadn’t had any cover, Carla estimated they may have been able to cover their bills for two months before they’d have had to make major adjustments to cut costs.
“If we hadn’t had this cover, we’d frankly have been absolutely screwed,” said Carla.
“Our sons needed looking after, we weren’t working and I was already thinking, ‘What on earth are we going to do?’.
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“But the money we got paid meant we didn’t have to worry about anything in the end and we were able to focus on getting better.
“We even had some left over to take the boys to Disneyland once we’d recovered.
“It was just life-changing and I don’t know what I’d have done without it, but I know loads of people who aren’t protected.
If I had access to more information on breast health when I was younger, I may have caught my symptoms earlier
“And what happened to me could happen to anyone.”
WHAT IS CRITICAL ILLNESS COVER?
Critical illness cover is a protection policy that pays out a lump sum if you are diagnosed with a serious illness.
The cash can be used to cover mortgage payments and bills while you are off work, giving you vital time and space to recover.
Insurers paid out a record £7.34billion for protection policies last year, up from £6.32billion the previous year, according to figures shared exclusively with The Sun from the Association of British Insurers (ABI).
This included £136million for critical illness policies, with the average claim paying £67,267.
Meanwhile, around £177million was paid out for income protection claims - where you keep being paid your income while off work sick.
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And the number of protection policies approved was 98.3%, meaning less than 2% were rejected. Claims may be declined if the person has not disclosed an existing medical issue, for example.
Yvonne Braun, director of policy, long-term savings, health & protection at the ABI, said: “Every single day in 2023, the life insurance industry paid out over £20million to people affected by serious accidents, illnesses or even the death of loved ones.
“The financial impact of these events can be devastating.
“These figures demonstrate that insurance plays a crucial role in supporting people financially when they need it most.”
Cancer was the most common reason for claims on critical illness policies last year.
On average, women diagnosed with breast cancer need to take six months off work.
However, more than 11million people in the UK have less than £1,000 in savings to tide them over if they lost their income, according to figures from The Resolution Foundation.
Yet, just 7% of adults have critical illness or income protection cover, according to recent figures by financial services firm Charles Stanley.
Critical illness cover is a protection policy that pays out a lump sum if you are diagnosed with a serious illness
Rose St Louis, protection director at Scottish Widows, said: “Putting a safety net in place can help ease the additional stress of making ends meet when life gets turned upside down by not being able to work.”
HOW TO FIND THE RIGHT COVER
As a general rule, parents should take out life insurance to ensure their dependents are protected if something happens to them.
And it is a good idea for anyone with ongoing bills such as mortgage or rent to take out critical illness cover or income protection.
Both of these policies pay out if you are diagnosed with a condition that prevents you from working.
Make sure you understand what you are taking out and what fees you are paying before agreeing.
Watchdog the Financial Conduct Authority this week raised concerns that some protection products are not providing good value for customers.
For example, it said that some people are paying more in premiums over their lifetime than the maximum payout they could get.
These policies pay out if you are diagnosed with a condition that prevents you from working
It is investigating the sector and plans to take action if it finds any faults.
Always disclose existing medical conditions when taking out cover, as your claim could be rejected if you do not.
You can get “level” cover, which pays you the same amount whenever you claim, or “decreasing” cover, which reduces over time, for example because your mortgage size is decreasing.
Decreasing term cover tends to be slightly cheaper.
The average level term critical illness premium for someone aged 30 is £11.21 a month, according to data from I Am Insured, while for decreasing term cover it is £8.64.
Firstly, check if your employer offers cover before buying a new policy.
You may be able to get a discount via a salary sacrifice scheme.
To find the best protection policy for you, use a comparison website such as MoneySuperMarket and Compare The Market. These scour the market for the best deals.
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It is a good idea to get professional help if you are not sure what type of cover you need.
A broker such as LifeSearch or ActiveQuote can look at your circumstances and work out how much cover you will need and what is the best policy for you.
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