How much critical illness cover do you really need?

How much critical illness cover you may need will depend on your personal circumstances and the financial impact a critical illness may have on you and your family.

Critical illness cover could help to pay off your mortgage, cover bills and allow you to maintain your current lifestyle if you suddenly became ill and couldn’t work.

Deciding how much critical illness cover you may need could be as simple as using our critical illness calculator below.

Or continue reading our handy guide to help you estimate your ideal cover amount.

Calculator

How much critical illness cover do I need? [Calculator]

Enter your financial commitments and other costs you’d like your policy to cover to understand how much critical illness cover and life insurance you may need.

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£129,130 is the average mortgage debt in the UK.

Life insurance with critical illness cover could help to keep your loved ones in the family home should you fall ill or pass away before paying off the mortgage.

Source: Finder.com
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£2,700 per month is the average UK household budget, life insurance with critical illness cover could help to replace your income and cover necessities such as bills and living expenses if you fell critically ill or passed away.

Source: Nimblefins.co.uk
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£2,277 is the average credit card debt per household in the UK.

Factoring in any debts into your sum assured could provide you with peace of mind that you could continue with payments if you were to fall ill, or that the debts could be settled after your passing.

Source: Themoneycharity.org.uk
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Should anything happen, you’ll want to ensure that necessary costs are protected for your children.

This could include childcare (on average £7,729 per year) or school associated costs (up to £1,756 per school year).

Sources: Daynurseries.co.uk & Theguardian.com
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If you were to fall critically ill, it’s likely you’d need to take a significant time off work in order to recover.

While you’d be entitled to sick pay and/or government support, this may not be sufficient to cover all your key costs.
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The price of private medical treatment can vary depending on the severity of the condition and the type of treatment required. It could be wise to add an additional sum to cover these costs.
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If you don’t claim on your policy for a critical illness and you pass away within the policy term, your loved ones could use the pay out to help cover the cost of your funeral.

The current average cost of a funeral in the UK is £4,141, with the overall cost of dying up to £9,658.

Source: SunLife.co.uk
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You could factor in an amount to leave to your loved ones to spend as they wish after your passing. Alternatively, you could make a cash gift to a charity of your choice.
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Your total cover estimate

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At Reassured, our award-winning and FCA-regulated service can be used to compare quotes to help you secure the right cover to meet your needs.

Life insurance with added critical illness cover starts from just £10 a month through us º . Simply get in touch today.

How do I work out how much critical illness cover I need?

It’s important to choose the right amount of critical illness cover that suits your needs as well as your budget.

Firstly, you’ll need to add up your usual financial commitments and other costs that your policy pay out could help towards.

Some things to consider include:

  • Mortgage or rent - Your home is likely to be your most significant expense, whether you’re paying off a mortgage or renting. Critical illness cover could help alleviate some of the financial pressure of keeping up with payments while you’re off work, so you may want to factor this in when calculating your cover amount. The average UK mortgage debt is £132,378[1]
  • Household bills - As well as ensuring you have a roof over your head, you may also consider household bills that may need to be paid. After your mortgage or rent, council tax is typically the largest cost when running a home, followed by gas and electric
  • Day to day living costs - Critical illness cover could be used to help towards essential living expenses for you and your family, such as food shops, transport and clothing. If you have children, you may want to consider childcare fees and/or university costs too
  • Outstanding debts - If you’re liable for any personal loans or debts, such as a credit card, it may be reassuring to have the amount owed covered by your policy should you be unable to earn your usual income. £4,308 is the total unsecured debt per adult in the UK[2]
  • Private medical treatment or making adaptations to your home - While it’s difficult to foresee how much critical illness cover you may need for potential medical expenses, you could set aside some cover for this as an additional safety net. Especially as certain costs may not be covered by the NHS, such as making adaptations to your home if necessary

The second step is to consider the protection you may already have in place or could be entitled to if you became ill or disabled. For example:

  • An income protection policy (pays out if you’re unable to work due to illness or injury)
  • Any savings or assets you have of sufficient value
  • State benefits (you can check your entitlements on the government website)
  • Any critical illness cover you may have as part of your employment package

If you have any of the above, then you could subtract this amount from the amount of critical illness cover you require.

Once you have added up all your usual financial commitments and deducted any existing protection, you’ll have a good idea of how much critical illness cover you may need.

As an example:

Term length: 20 years
£100,000 for mortgage
£100,000 for bills and living costs
£10,000 for medical costs

= £210,000 of critical illness cover

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Do I need critical illness cover?

You may need critical illness cover if your financial well-being would suffer in the event of a new serious illness or disability.

Unfortunately, anyone could develop a major illness at any age, so it’s important to have the right protection in place should this happen.

If you need help choosing between critical illness cover, income protection or life insurance, then get in touch with Reassured.

Our financial protection experts can provide all the information you need to make a fully informed decision, as well as provide free quotes.

How does critical illness cover work?

Critical illness cover pays out a tax-free lump sum if you’re diagnosed with a life-changing illness during a specified term.

Most policies cover between 30 and 50 critical conditions. This usually includes:

  • Cancer
  • Heart attack
  • Stroke
  • Multiple sclerosis
  • Blindness
  • Kidney failure

To make a successful claim, your illness must meet the insurer’s definition of the illness, and the survival period must also pass (either 10 or 14 days following the diagnosis, depending on the insurer).

Interested to find out which critical illness providers have the highest pay out rates? See our critical illness pay out guide for the top 9 in the UK.

What type of critical illness cover do I need?

There are two types of critical illness cover that you can arrange depending on what you’d like your policy to cover:

  • Level term - Provides a fixed lump sum pay out if you pass away during a set term. Could help to cover your mortgage or rent, bills and family living costs
  • Decreasing term - Provides a lump sum pay out if you pass away during the set term, but the pay out amount reduces until it reaches zero at the end of the term. Often best to help cover a repayment mortgage and is usually cheaper than level term cover

Critical illness cover is available as a standalone policy with some insurers, but it’s often taken out as part of a life insurance policy for additional protection.

Combining both types of cover can help you save money on your premiums as the policy will only pay out once - either if you pass away or are diagnosed with a critical illness during the policy term.

Please note, Reassured can only help arrange critical illness cover as part of a life insurance policy.

How much is critical illness cover?

If you take out critical illness cover with a life insurance policy through Reassured, prices start from just £10 a month.

However, the exact cost of your monthly premium will depend on the information you provide during the application process.

Monthly premiums are calculated based on:

  • Age
  • Health & wellbeing
  • Lifestyle (such as your smoking status)
  • Weight (BMI)
  • Occupation & hobbies
  • Policy type (level or decreasing)
  • Cover amount
  • Policy term length

To find your perfect policy at the right price, why not make the most of our award-winning service today?

We’ll provide you with our best quotes from a panel of top UK insurers.

How much life insurance and critical illness cover do I need?

If you take out life insurance and critical illness cover as a combined policy, you can choose the same amount of cover for both or have two separate amounts depending on your needs and budget.

Many people take out a higher level of life insurance as it can be more affordable (from just 20p-a-day through Reassured if bought as a standalone policy † ), however, the same rules apply when determining how much cover you need.

Life insurance with added critical illness cover can help protect your mortgage, bills, and day to day living costs in the event of your passing or if you’re diagnosed with a serious illness during the policy term.

The life insurance part of your policy (in the event of you death) could also help towards:

  • Funeral costs (average cost of a UK funeral is £4,141[3])
  • Inheritance tax liability (40% on the value of your estate above £325,000)

You can use our ‘how much critical illness cover do I need?’ calculator tool provided in this guide to work out how much life insurance and critical illness cover you may need.

Comparing quotes can also help you determine how much life insurance with critical illness cover is best for you.

Increasing your cover in the future

At some point in the future, you may want to increase the amount of critical illness cover you have to suit a change in your circumstances.

For example, if you experience one of the following events:

  • Getting married
  • Having a baby
  • Buying a new home
  • Changing jobs or getting a promotion

Fortunately, most insurers offer a ‘guaranteed insurability option’ or ‘milestone benefit’ that allows you to increase your level of cover at certain life events like those above, ensuring that you’re adequately protected throughout your policy term.

If you’re eligible and you choose to use this benefit, the insurer won’t require any new medical information. Your monthly premium would simply increase in line with the larger cover amount.

While it’s possible to make changes to an existing policy, it’s important to check your policy documents for availability and terms.

How to save money when buying critical illness cover

Hopefully this article has helped you determine how much critical illness insurance you may need to suit your circumstances.

If so, the next step is to get quotes to see what’s affordable for you. It’s also important to compare multiple quotes, as prices will vary between different insurers.

At Reassured, we offer a fee-free service that can help you compare quotes for life insurance with added critical illness cover from a panel of top UK insurers - saving you time and money.

We can also provide expert support regarding a range of life insurance and critical illness cover options if you’re still unsure about your protection needs.

Simply fill in our short form to receive your free quotes, or to speak to one of dedicated specialists today.

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Sources:

[1] https://www.finder.com/uk/mortgages/mortgage-statistics

[2] https://themoneycharity.org.uk/money-statistics/

[3] https://www.sunlife.co.uk/funeral-costs/

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