FORSYTHE FINANCIAL PLANNING

For most of us, our ongoing good health and vitality is something we take for granted. We’re happy to get on with living our lives. The risk of suffering a serious illness that could impact our day-to-day living is, quite reasonably, something we’d rather not spend a lot of time thinking about.

But consider, even just for a moment, the consequences of a serious illness like cancer, a heart attack, or a severe stroke. The repercussions could result in a very negative personal and financial impact on you and your family. It could also have major implications for your business partners.

How would you cope financially without Serious Illness Cover?

The financial effects of suffering a serious illness can be devastating. How would you cope? How would you handle your family’s financial needs such as household bills, school fees, motor expenses, and other living costs? There may be additional financial strains caused by you suffering a serious illness, such as ongoing medical treatment, loss of work, or the cost of adapting your home or car.

Cancer in Ireland

• By 2020, 1 in 2 people in Ireland will develop cancer during their lifetime. It is predicted that Ireland could potentially see a doubling in the incidence of cancer by 2045.
• In Ireland, almost 45,000 new cases of cancer are diagnosed each year. This means that one person is diagnosed with cancer every 3 minutes.

All data sourced from the National Cancer Registry of Ireland (NCRI) (www.ncri.ie) and the Central Statistics Office (www.cso.ie)

What is Serious Illness Cover?

Serious illness cover is a form of insurance that pays out a tax-free lump sum if you’re diagnosed with a serious illness during the term of the policy. Specified illness cover is sometimes referred to as critical illness cover or serious illness cover but they all refer to the same thing.

Specified illness cover can be purchased as a standalone cover or combined with life cover or mortgage protection under one policy. 

Standalone specified illness cover

Standalone specified illness cover means that your cover is kept separate from any other life insurance policies you might have. 

Accelerated and additional specified illness cover

Your specified illness policy can also be added to your mortgage protection or life insurance policy. In this instance, it can be added as an additional cover or accelerated cover and is best explained with an example.

Accelerated specified illness cover 

• Say you buy €500,000 life insurance with €250,000 accelerated serious illness cover
• You make a successful serious illness claim
• €250,000 cash is paid out tax-free by your insurer
• Your life cover is reduced by €250,000 to €250,000
• Your policy continues with €250,000 life cover and this amount would also be paid out if you were to die during the remainder of your policy

Additional specified illness cover

• Say you buy €500,000 life insurance with €250,000 additional serious illness cover
• You make a successful serious illness claim
• €250,000 cash is paid out tax-free by your insurer
• Your life cover remains at €500,000 as the serious illness cover was in addition to your life insurance
• Your policy continues with €500,000 life cover and this amount would also be paid out if you were to die during the remainder of your policy.

What illnesses are covered?

Before getting covered it’s really important to know that not all serious illnesses will be covered by your policy. With some policies, your condition would have to be extremely serious before you could make a claim and in many cases, more common illnesses, such as back injury and treatable cancers, aren’t covered at all.

Your policy’s terms and conditions will outline exactly what’s covered and your insurer will only pay out if you’re diagnosed with one of the specific illnesses or disabilities listed.

Also, you usually won’t be covered if your illness is judged to be caused by drug or alcohol abuse, a self-inflicted injury, or a failure to follow medical advice.

Do I need specified illness cover?

If you have a mortgage or other loans that would still need to be paid if you became ill and were unable to work, then you should consider getting cover. Likewise, if you have a family who relies on your income then cover is recommended.

The maximum rate for Disability Allowance from the Department of Social Welfare is currently only €220 a week, meaning relying solely on the State should you get sick won’t be an option for most people.  

Before taking out specified illness cover it’s always a good idea to speak with a qualified financial advisor who can conduct a full financial review with you and advise of the appropriate level of cover for your personal circumstances.

Do I need to undergo a medical examination to take out specified illness cover?

If you enjoy good health then the answer is usually no.

However, if you have an underlying condition, are over a certain age, or are applying for a large amount of cover then you may need to undergo a medical examination or complete a Nurse medical questionnaire, in-person or over the phone which will be organised and paid for by the life insurance company.

Your life insurance company may also have a medical questionnaire sent to your doctor for him or her to complete.

How much is Serious Illness cover?

Specified illness cover tends to be more expensive than other forms of insurance such as mortgage protection or life insurance as you don’t have to die before a benefit is paid out.

The exact cost of your policy will depend on several things such as the amount of cover you choose, how long you want the policy to run for, your age, and your health status.

Smokers will also pay more for coverage than non-smokers, so another good reason to try to stop smoking.