Which optional extras are important?

You should consider adding Critical Illness Cover, Waiver of Premium and Indexation to your Life insurance policy. Terminal Illness cover will be included in your policy free of charge.

Critical Illness Cover
If you add Critical Illness Insurance, then you will be able to claim if you are diagnosed with any of the serious illnesses listed on your policy. Each Insurance Company has its own list of critical illnesses, but you’ll find an example list at the relevant question shown below.

It is important to consider taking out Critical illness cover whether you combine it into your Life Insurance policy (which is by far the cheapest way to buy both insurances) or you take out separate policies (which gives you much more protection).

If you do add Critical Illness cover to your Life Insurance policy then, if the policy pays out because of Critical Illness, the policy it is finished and will not pay out again if you were to die. However, if you want your Life Insurance to continue after a claim for Critical Illness, then you will need to buy separate Critical Illness and Life Policies. This costs more but you have, in practice, got a potential payout for critical illness AND another payout if you died whilst the Life policy was in force.

Waiver of Premium
Another add-on that’s well worth considering is Waiver of Premium. If you have waiver of premium the Insurance Company will pay your policy’s monthly premium if you were off work as a result of illness or unemployment. It is not expensive, but could allow you to keep the policy in difficult circumstances.

Indexation
You should add Indexation if you want your sum insured to increase in line with inflation. It protects the buying power of the sum you have insured for. Each year your insurer calculates how much your cover needs to increase and then they automatically adjust your policy. Your monthly premium then increases in proportion to the increase in your sum insured. (Please note: you do not need Indexation if you are protecting a mortgage.)

Frequently Asked Questions related to the above topic.
Click below if you wish to read them: -

• Should you have a “Guaranteed” or a “Reviewable” policy?
• Should you include Terminal Illness Insurance?
• Should you include Critical Illness Insurance on your policy?
• Should you consider Mortgage Life Insurance instead?
• What is the difference between Critical Illness Insurance and Terminal Illness Insurance?
• What factors can add to the price?
• Go to menu of Frequently asked Questions about Mortgage Life Insurance
• Go to menu of Frequently asked Questions about Life Insurance
• Go to menu of Frequently asked Questions about Critical Illness Insurance
• Go to menu of Frequently asked General Questions