Protection
We all probably know people – friends or family – who have fallen ill, had serious accidents or died suddenly. Even when you’re young and healthy, the chances of these things happening to you are more likely than you might think. We all dream of winning the lottery even with odds of 14 million to 1. However, when it comes to the chances of our falling ill or dying early, we believe that it will not happen to us even though the chances of that happening is significantly higher. More than 40,000 people die every year between the age 20-54. More than 300,000 people are diagnosed with cancer every year.
Losing a family member through accident or ill health is emotionally traumatic. It can also cause enormous financial problems. Financial products are sometimes at their most useful when they are protecting our families, our incomes or our property. Whilst insuring ourselves against an undesirable event such as sickness or death may not be a pleasant thing to think about, the benefit of being able to set financial issues aside at emotionally difficult times cannot be overlooked.
There are many different ways to protect your family and your standard of living when you need it most. We give here basic information about some of the most useful and popular products.
Life Insurance
If you have dependents who rely on your income or a family living in a house with a mortgage that you pay – a life insurance policy can provide for them if you die. On payment of a regular premium, the insurance company will pay lump sum or a regular monthly payment to your dependants if you die. Term life insurance policies run for a fixed period of time – such as (5, 10, 25 years or longer). These kinds of policies only pay out if you die during the term of the policy, provided you have maintained your premium payment. It is not expensive and easily affordable.A whole-of-life policy will pay out no matter when you die, as long as you keep up with your premium payments.
Income Protection
If you fall sick and are unable to work your income will stop. State support is not enough to meet your expenses. Income protection plan covers a wider range of illnesses and disabilities, and gives regular payments until you recover enough to return to work, retire or reach the end of the policy payment term or die. Normally, insurance companies allow up to 50-65 % of your income as the maximum cover till the age of 65. You can claim more than once during the term of the policy and claim can continue for as long as you are not fit to return to work.
Critical Illness
If you suffer from a major illness you will not be able to work. Critical illness insurance is a long-term insurance policy where you’ll get a tax-free ‘lump sum’ – a one-off payment – if you’re diagnosed with one of the serious illnesses covered by your insurance policy. It’s designed to pay off your mortgage, debts, or pay for alterations to your home such as wheelchair access should you need it. Your critical illness insurance will pay out if you get one of the specific medical conditions or injuries listed on the policy. Not all conditions are covered. The policy will also specify how serious the condition must be. Examples of critical illnesses are heart attack, stroke, certain types and stages of cancer, conditions such as multiple sclerosis etc.
Private Medical Insurance
Most UK residents are entitled to free healthcare from the NHS. However, we all know that there is a waiting time for hospital treatment. Some people also prefer going to private hospitals. Private medical insurance (also known as health insurance) can supplement what’s available on the NHS. Like all insurance, the cover you get from private medical insurance depends on the policy you buy. Basic private medical insurance usually picks up the costs of most in-patient treatments (tests and surgery) and day-care surgery. Some policies extend to out-patient treatments (such as specialists and consultants) and may pay you a small fixed amount for each night you spend in an NHS hospital. Your insurance usually won’t cover private treatment for:
pre-existing medical conditions
chronic illnesses such as HIV/AIDs-related illnesses, diabetes, epilepsy, hypertension and related illnesses
normal pregnancy and childbirth costs
organ transplants
injuries relating to dangerous sports or arising from war or war-like hostilities
cosmetic surgery to improve your appearance