How could you spend your critical illness pay out?
Giving your loved ones a financial safety net and the assurance that you and they would both be able to get by in the unfortunate event that you were diagnosed with a serious illness is one of the main reasons behind getting any type of life insurance policy.
A payout has more uses than you might imagine, including helping to pay for any necessary medical care, therapy, and other costs associated with your recovery.
If you were to be diagnosed with a critical illness as specified in your policy conditions, critical illness cover, a type of life insurance policy, would be able to pay-out a lump sum tax-free.
One of the main advantages of critical illness insurance is that you can file a claim while you’re still alive, so you could receive the money in addition to your loved ones. There is no predetermined purpose for which you must use the money when a life insurance policy pays out; you are free to choose.
Day to Day Spending
There are so many expenses that nearly every household makes each month that it can be easy to overlook the little things. Who would pay for the necessities if you could no longer work because of your illness if you are the only earner or even if you have a dual income household?
You and your loved ones may be able to get by on the essentials while you recover with the help of the payout from your critical illness insurance policy. Here is just a small list of the necessities that your insurance payout might enable you to purchase:
- Food shopping
- Regular monthly expenses such as water, gas, council tax
- Childcare*
- Veterinary bills
- Mortgage or rent payments
- Travel expenses if speciality hospitals are far away
- Home modification
*In the Spring Budget 2023, the Government introduced new childcare support for families
Tick off your bucket list
Many people decide to use their payout to cross items off their bucket list, create enduring memories with their loved ones, or fulfill a lifelong dream. The money would ultimately be yours to use however you please.
A lot of critical illness policies also include children’s coverage, so if your child were unfortunate enough to be diagnosed with one of the illnesses covered by the policy, you could still receive a payout from it while keeping your policy in force.
A claim doesn’t always have to be on the extreme spectrum such as cancer, some critical illness policies can cover the diagnosis of type 1 diabetes for a child for example, deafness or loss of speech.
Adaptions to Your Lifestyle
Nobody can predict what will happen in the future, and depending on your diagnosis, you may need to adjust how you live. Having some extra money on hand could help ensure that all of your medical expenses are paid for while being diagnosed and treated for a serious illness.
A portion of your pay should be set aside to cover any additional medical costs, such as those for hospital stays, travel, medications, or medical equipment. This can also include any home modification and changes which your home may need. Due to critical illness you may need to make changes such as adding in a stair lift, moving house to a bungalow, support rails or adding a wheelchair friendly bathroom.
Additionally, it might be a good idea to set aside some cash for any future care and rehabilitation services (e.g physiotherapy & osteopathy).
A Safety Net for the Future
Critical illness payouts are there to help you and your loved ones when you need it the most. However, setting aside a portion of the lump sum to plan for your loved ones’ future would be an excellent way to put your insurance payout to use.
If your critical illness worsened and you died, the tax-free lump sum from your critical illness policy could be set aside as a safety net for your loved ones. With this money set aside, your loved ones will have peace of mind simply knowing it is there, ready to be used when it’s needed.
Payment towards your Mortgage
A mortgage is one of the most significant debts that most of us will ever incur in our lives. Consider how your loved ones would manage to make the regular monthly mortgage payments if you were not present. If you were diagnosed with a specific critical illness, your income could be affected for a period of time. How would your loved ones manage to keep up with these payments without your income?
A Life insurance policy could be used to pay off your mortgage and if you don’t have a life insurance policy, you could simply set aside a portion of your critical illness cover to help you keep up with your mortgage payments.
However, if you’re interested in a life insurance policy to pay off your mortgage, this is something that we can look into.
Why consider having critical illness cover?
With a critical illness policy in place, you can have peace of mind knowing that if you or your child are diagnosed with a specific critical illness, your family will be financially secure.
If you don’t already have a critical illness policy, our team are on hand to find the most suitable cover to meet your needs and requirements. Get in touch with our team today!
