Cover for your children is the most undervalued aspect of critical illness insurance. But as most policies automatically provide the cover as a free extra, we suspect that some policyholders don't even know they've got it!
Most policies automatically insure your children albeit at a lower level of benefits than the main policyholders cover. But this cover is invaluable, especially if your child becomes critically ill and you need to take time off work to provide care.
Critical Illness insurance pays out a tax free capital sum if the policyholder, or one of their children, suffers one of the very serious illnesses scheduled on their policy. The only rider is that the claimant must survive at least 28 days after the diagnosis.
Scottish Provident, one of the UK's largest critical illness insurers has announced that claims for children is now its fourth-largest cause for a claim. Says Nick Kirwan, their Protection Marketing Director, "Work takes a back seat when your child becomes ill. You may need to cut your working hours or even stop working altogether".
If your critical illness policy does insure your children, then a payout from the policy gives you the financial flexibility to do just that. So how much will they pay out?
Most insurers will pay a proportion of total insured value if a child becomes critically ill. For example, Norwich Union will pay out 50% of the insured sum or £10,000 whichever is the lower – and this cover includes adopted children and step children. Standard Life and Legal & General also pay up to 50% with Standard setting the maximum payout at £25,000 and in L&G's case it's £15,000.
Cover never starts as soon as the child is born. With some policies cover starts up at 3 months but others wait as long as three years. Ideally, you want cover to start as early as possible.
Another other point to understand is that if the main policyholder has a claim, then the policy pays out and terminates – they can't claim more than once. But if there is a claim for a child, the policy does not terminate – the cover for the policyholders continues unaffected. And if you start or add to your family after you've started the policy there's no need to inform the insurer as the cover automatically covers all your children.
Most policies automatically insure your children albeit at a lower level of benefits than the main policyholders cover. But this cover is invaluable, especially if your child becomes critically ill and you need to take time off work to provide care.
Critical Illness insurance pays out a tax free capital sum if the policyholder, or one of their children, suffers one of the very serious illnesses scheduled on their policy. The only rider is that the claimant must survive at least 28 days after the diagnosis.
Scottish Provident, one of the UK's largest critical illness insurers has announced that claims for children is now its fourth-largest cause for a claim. Says Nick Kirwan, their Protection Marketing Director, "Work takes a back seat when your child becomes ill. You may need to cut your working hours or even stop working altogether".
If your critical illness policy does insure your children, then a payout from the policy gives you the financial flexibility to do just that. So how much will they pay out?
Most insurers will pay a proportion of total insured value if a child becomes critically ill. For example, Norwich Union will pay out 50% of the insured sum or £10,000 whichever is the lower – and this cover includes adopted children and step children. Standard Life and Legal & General also pay up to 50% with Standard setting the maximum payout at £25,000 and in L&G's case it's £15,000.
Cover never starts as soon as the child is born. With some policies cover starts up at 3 months but others wait as long as three years. Ideally, you want cover to start as early as possible.
Another other point to understand is that if the main policyholder has a claim, then the policy pays out and terminates – they can't claim more than once. But if there is a claim for a child, the policy does not terminate – the cover for the policyholders continues unaffected. And if you start or add to your family after you've started the policy there's no need to inform the insurer as the cover automatically covers all your children.
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