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A critical time to check you're insured for illness

Have you considered insuring it by taking out critical illness insurance?
Have you considered insuring it by taking out critical illness insurance? Have you considered insuring it by taking out critical illness insurance?

THIS week many of us will have been celebrating with, not just Christmas dinner, but a few nights out over the festive period.

And soon, after New Year’s Eve, we have the traditional time for New Year’s resolutions, the time when we may seek to make a new plan for 2017: make a new start, cut down on the food and drink, perhaps begin that exercise programme to get fit and healthy.

New Year can also be a time for doing something else for your health: have you considered insuring it by taking out critical illness insurance (CI)?

One in four men and one in five women are hit by a critical illness during their working lives, and we are much more likely to lose our income through illness, than we are to die, before we finally retire.

According to the Association of British Insurers, over one million working people unexpectedly have to give up work because of injury or illness.

With improvements in drug treatments and healthcare, we are also living and working longer. Average longevity has reached 89 for women and 86 for men, and to mirror that, the retirement age is being raised. From November 2018, it will be 65 for both men and women, rising to 66 in 2020, and to 67 by 2028.

This is expected to lead to a rise in the incidence of critical illness, as our working lives are extending, making the need to protect our income all the more crucial.

When CI was conceived in South Africa in the 1980s, it was designed to cover four core conditions - cancer, heart attack, stroke and coronary artery by-pass graft (CABG).

Critical illness policies have become much more sophisticated in the meantime, with many covering a wide range of different diseases. However, the insurer Munich Re in the UK tells us that the four core conditions named above account for 83 per cent of claims, with cancer alone accounting for 58 per cent.

As consumers, we seem to be alert to the risks we face. Earlier this year, the insurer Aviva did some research to show that, when we think of our personal health, over half of people (58 per cent) worry about being diagnosed with cancer, a third of us (34 per cent) worry about heart disease, and almost the same number (32 per cent) worry about having a stroke.

But there is another reason why the time has never been better for considering taking out CI in 2017.

Cover is getting cheaper. In fact, Munich Re says the cost of CI has reduced by 40 per cent since the beginning of the millennium. Yet, despite the likelihood that we will need it, and the concerns and worries documented above, only 16 per cent of us currently have a policy.

So if you’re one of those who are aiming to get fit, or lose a few pounds in the coming months, then perhaps this might be the perfect moment to make a New Year’s resolution to insure your health, and not just get fit and healthy!

:: Michael Kennedy is an independent financial adviser and pensions specialist, and can be contacted on 028 71886005