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Insurance guide

7 things to know before taking out specified illness cover

7 things to know before taking out specified illness cover
Rob Flynn

Rob Flynn

Staff Writer

Specified illness cover can help to put your mind at ease and safeguard your family's future, giving you more time to enjoy the little things. But what should you know before taking out a policy?

Being struck down with a debilitating illness can happen to anyone, young or old, and when planning for you and your family's future, choosing the right specified illness policy is a simple and effective way of protecting you and your loved ones should you get seriously ill. 

But before you take out a policy there are a number of things you should know...

1. What exactly is specified illness cover?

Specified illness cover (SIC), also known as serious illness cover, and in the past critical illness cover, is a type of life cover which pays out a tax-free lump sum should you be diagnosed with a serious illness that is specifically covered by your policy.

Whereas mortgage protection and life insurance will only pay out upon your death, a SIC policy can provide a payout upon illness and can be invaluable in the event you get struck by a serious illness and become too sick to work but still have bills and a mortgage to pay.

Specified illness cover is most commonly included as an additional level of cover on a life insurance or mortgage protection policy, although it can also be taken out as a standalone insurance policy in its own right.

2. Not everyone needs specified illness cover

Specified illness cover may not be necessary if you already have insurance cover in place that would provide for you in the event of you being diagnosed with a serious illness.

In cases where an individual doesn't have cover in place, SIC can help to pay your bills and any large outstanding loans, such as you mortgage, should you be unable to work. The lump sum may also be used to protect family members in the same instance.

The level of cover you'll require will usually depend on the size of your mortgage and whether you have any children or people who rely on your income. 

If you’re considering taking out a specified illness policy we would always advise that you speak with a qualified financial advisor first.

You can apply for cover right now on bonkers.ie and get a call back from one of our professional advisors to discuss your application within only 24 hours.

3. The cost of a policy can vary greatly  

The cost of your policy will depend on a number of different factors, which include:

  • The amount of cover that's required
  • Whether it's a single policy for just you or a dual policy that covers you and a partner
  • The term or length the policy will run for
  • Your health status
  • Your age

Additionally, if you are a smoker you can expect to pay extra, but more on this shortly.

4. Not all policies cover the same illnesses

When applying for cover it’s important to be aware that not all SIC policies will cover the same illnesses. Each insurer will include a list of the specified illnesses it covers in its terms and conditions so it’s always important to make sure you know what you’re covered for and for how much.

In cases where an individual has a pre-existing condition, it’s still possible to receive cover, however your insurer will most likely exclude your pre-existing condition.

Some insurance companies will also not pay out for less advanced serious illnesses such as certain types of treatable cancer, and will often only pay out where certain illnesses meet what’s called ‘specified severity’. This means that with some policies the illness suffered would have to be extremely serious before there would be a payout, and more common illnesses such as back or knee injuries are not covered at all.

Before signing any policy make sure to check and double check your policy terms and conditions as this will outline everything you're covered for.

5. Smokers will pay far more for cover

Briefly touched on above and an important thing that people should be aware of is that being a smoker will naturally impact your application when applying for SIC, and for obvious reasons.

It’s still possible to take out cover if you’re a smoker, however, you will be charged smoker rates which are more expensive and can include an additional loading depending on the number of cigarettes smoked per day.

People who smoke can expect to pay premiums of between 20% to 50% more for SIC than non-smokers. If that’s not an incentive to quit we don’t know what is!

Worth noting for those who have given up smoking for 12 months or more is that your application can be reassessed after that time by way of a simple test for nicotine, thus helping to drastically reduce the cost of your premium going forward.

Vaping and nicotine replacement products such as patches are also still classed as smoking by most insurance companies so this is important to bear in mind when submitting an application for non-smoker rates.

6. You won’t be covered when...

There are many situations where you may not be covered by your serious illness policy. We explain some of the most important ones below.

In instances where your illness is determined to be caused by drug or alcohol abuse you generally won’t be covered if you fall ill.

Similarly, a self-inflicted injury or a failure to follow medical advice would also affect your ability to make a successful claim.

And as mentioned already, serious illnesses like cancer that are deemed to be easily treatable won't be covered either.  

Another thing people may be unaware of is what’s known as ‘territorial limits’. This essentially means that if you live outside the geographic boundaries agreed upon in your policy, for example, outside of the EU, or for a certain number of months in the year, you may be unable to make a claim.

When applying for serious illness cover it’s also very important to disclose any pre-existing medical conditions as any not disclosed during your application could affect the validity of any future claims.

7. You can add specified illness cover to a life insurance policy

As stated above, SIC can be taken out as a standalone product in cases where you have no existing insurance cover in place, but SIC can also be added on when applying for mortgage protection or life insurance cover, also known as additional SIC.

For example, if you take out a life insurance policy worth €200,000 and include SIC to the value of €50,000, a lump sum to this value will be paid out if you make a claim that satisfies the conditions of your SIC policy.

This will not affect your life insurance cover, which will remain at the amount you initially purchased, in this case €200,000, and would also to be paid out if you were to die during the remainder of your policy.

We’ve got you covered at bonkers.ie

Our serious illness comparison service lets you easily compare prices and benefits across all of Ireland’s main insurance providers. And what’s more, it’s completely free, easy-to-use, 100% impartial and accurate.

Whether you’d like a single policy, a joint policy, or additional benefits like indexation, we’ll search a wide range of policies across multiple insurers and produce a quote for you in just seconds.

Compare today and talk to one of our insurance experts to get the right cover in place for you and those you care about.

At bonkers.ie, we’ve got you covered.

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