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"I've been recommending insurance policies to protect
people against illness for seven years. In January 2001 I received a phone
call that every financial adviser fears. One of my clients had called
me let me know that his partner had been diagnosed as having cancer. Fortunately
they had a policy that would help them through the financial effects.
You sell these policies in the hope that people will not need them. It's
not until someone actually claims that you realise the full importance
of the job that you do!"
Chris Morgan editor pinkfinance.com and qualified
independent financial adviser.
How would you cope if you were not able to spend any
money on yourself? What if you're standard of living was drastically reduced
due to illness? The fact is that it could happen!
Most people think of financial provision in the form
of savings or investments. They contribute to ISA's or Pensions to create
wealth for their future, but fail to think about the effects of a serious
illness.
Add up all of your available wealth and then divide
your monthly salary into this figure. It would be very surprising if you
had 6 month's worth of provision in the bank. If you're paying into a
pension it is unlikely that you'll be able to draw the benefits before
you are 50. If you do they probably won't keep you in the manner that
you're accustomed. 
The idea of this article is not to scare you, but to
highlight the issues that exist. You should know that there are ways in
which to preserve your savings and not rely on your pension for cover.
In return for a monthly premium many companies will pay out a lump sum
benefit if you're diagnosed as having one of a list of specified critical
illnesses.
Lump sum Personal Income Protection or Critical Illness
Cover is one of the recent additions to the range of insurance products
on the market. Companies will pay out an agreed sum assured that can then
be used to clear debts, your mortgage or pay for treatment. This kind
of cover would give you the choice, room to think and time to recover
- without worry. The cover can be obtained alongside a mortgage or as
a separate plan and if you recover from your illness following payment,
they do not require the money to be repaid.
Medical technology is increasing so rapidly, that doctors
can keep you alive with conditions that 10 years ago you would not have
survived. In these circumstances a standard life assurance policy would
be of little use. The fact that you are then unable to work then causes
financial problems.
Critical Illness cover was invented by a cardiac surgeon
who recognised this financial need through his patients, immediately following
surgery. These policies now cover anything up to 20 different conditions.
These range from cancer, heart attack, stroke, major organ transplant,
through to kidney failure, deafness and blindness.
Many companies now offer this cover, however, you should
be aware that cover offered by banks generally cover fewer illnesses and
charge a higher premium. It is important to check for differences in the
small print, the amount of illnesses that are covered and the time that
has to elapse before payment of benefits. You should also take care to
select a company that does not ask personal lifestyle questions. If you
answer these questions they may request an HIV test and load your premiums.
There are companies that will offer cover to the gay community, however,
each case is individual. If you decide that critical illness cover is
important to you then you should approach a financial adviser with knowledge
of gay issues. They will be able to arrange cover without the third degree
questions.
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