How does a Specified Illness policy work?
Being diagnosed with a Serious Illness is a risk we are all exposed to. Unfortunately, rates of diagnosis are on the rise. This diagnosis can be life-altering in many ways. A very common issue for people is increased financial stress and hardship as a result of being seriously unwell. The last thing anyone needs on their mind during this turbulent time is financial worries. Where does a Specified Illness Policy come in? A specified illness policy can provide a tax-free lump sum 14 days after diagnosis of an illness covered under your plan and thus provide some level of financial security. The lump sum from your policy can provide a vital financial buffer when dealing with increased costs and often decreased ability to earn when you’re seriously unwell. Empowering you to focus on your recovery and alleviate the financial stress to some degree.
The tangible financial cost of being seriously ill
As mentioned above being seriously ill brings with it new expenses coupled with a reduced ability to work in most cases. Examples of these costs are time off work, traveling for medical treatment, overnight accommodation for treatment, medication, childcare, etc. The right Specified Illness protection can provide welcome funds to manage these additional expenses. A specified illness policy can prove invaluable in these turbulent times.
Cancer accounts for a large percentage of Specified Illness claims over 70% for females and over 60% for men. The Irish Cancer Society released statistics which show the increased cost of suffering from this increasingly common illness. There was an average cost to a family of 862 a month rising to 1200 a month with an average loss of income of 1400 a month. So here we see added expenses and the diagnosis will in general cause a reduction in earnings, 64% of cancer sufferers changed their work practices in some way with a third of patients giving up work.
The combination of additional expenses with a reduced ability to earn can very quickly lead to financial stress and hardship for a person or household. A large proportion of cancer patients told the Irish Cancer Society that “the stress of managing the cost was greater than the stress of having cancer”.
These statistics illustrate the need for some form of specified illness cover to alleviate or at least help a person manage the added financial stress of being ill. The financial side of things can be looked after and a person is allowed to focus solely on their recovery. It is about having the proper protective provisions in place if you find yourself in this unfortunate position.
Concerning trends
This article is not to scaremonger but rather to communicate the facts regarding the financial implications of a diagnosis. However, there is a concerning situation developing regarding illness cover. Diagnosis of serious illnesses and claims on specified illness policy’s are both on the rise and as a result, the premiums for specified illness cover are set to increase significantly. This is going to make an already expensive product less feasible for many people, as there is a lot of expenses we have to deal with each month. However, a situation could develop where the rate of diagnosis continues to increase but the number of people covered will most likely reduce. This leaves a protection gap in a lot of people’s financial plan. That is why now is the time to cover yourself for some portion of specified illness cover.
Life Cover is a vital part of Family Protection and should never be overlooked, but some form of Specified Illness cover along with this is advisable. Statistics show that you’re 3 times more likely to be diagnosed with an illness than to die prematurely. the protection aspect of your Financial Plan should protect you against various risks posed to you.
What are the main causes of claims?
Life companies offer cover on a wide range of illnesses, the list can be confusing. However, there are 3 chief causes of specified illness cover claims. These are Cancer, Heart Attack and Stroke. For example, these 3 illnesses made up 81% of Ireland’s specified illness claims last year, cancer specifically was 58%. The definitions regarding these illnesses are key in your policy. This policy is Specified Illness Cover and the claim will pay out when you’re diagnosed with a specified illness covered under your plan.
To conclude
This article is aimed at getting across the need for specified illness cover of some amount and now is the time to apply as premiums will increase. A lump sum from your specified illness policy can provide extremely welcome funds to alleviate additional financial worries or burdens the diagnosis can bring and allow you to focus on the most important thing to getting better.
Your protection policies should aim to provide cover against different risks you face, being diagnosed with an illness is, unfortunately, a foreseeable risk. A specified illness policy is an integral part of a person’s protection portfolio and can be a financial lifeline if that person becomes ill. This product is going to become more expensive and possibly unfeasible for many households, leaving people exposed.
Now is the time to put some level of cover in place. It is an extremely important personal protection product, to reiterate costs are going up but unfortunately the rate of diagnosis is not.
Dylan has been working in Financial Services for the last 4 years and also has a background in law. He is a financial planner with Niall G Lynch Insurance Brokers dedicated to delivering on the brokerages ethos of client focused financial planning and guidance.
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