Combining Life and Critical Illness Cover Within One Policy

Critical illness insurance can be taken out as a separate policy or combined with life insurance. The coverage offered by both policy types are very different but nevertheless provide financial protection against two significant forms of family and personal risk.

Life insurance can be viewed as a form of family protection as the sum insured is paid out to the chosen beneficiaries of the deceased policyholder. The payout can be used by the policyholder’s family for whatever purpose they wish, whether that be for general living expenses, repayment of debt or to contribute to funeral costs. On the contrary critical illness insurance is both a form of family protection and personal protection. If the policyholder were to suffer a serious (critical) illness the policy would payout a lump sum directly to them, which can be used for whatever purpose the policyholder decides.

By combining life and critical illness cover the policyholder would be able to protect his family from the financial impact of his or her death and protect both their family and themselves from the financial risk of suffering serious illness. To clarify, if the policyholder were to pass away the benefit would be paid to their beneficiaries but if a critical illness were suffered then the benefit would be paid directly to the policyholder.

With a combined policy there would only ever be one payout, either for the life insurance or critical illness part of the plan. Thus, if the policyholder were to die the policy would payout and then terminate or if the policyholder were to suffer a critical illness the policy would payout and then terminate. The only exception to this is if the amount of critical illness cover is less than the amount of life cover. In this case the plan would payout the critical illness sum insured upon the suffering of a serious illness and then the remainder upon death.