In the event that you are unable to work due to an accident, chronic illness, or disability, illness insurance will preserve your income.
Health insurance comes in a variety of forms. Others will cover payments for specific things, like your mortgage or credit card bills, while some send out a single lump sum or a consistent monthly income.
This page outlines the different forms of illness insurance that are offered as well as the factors you should consider before purchasing this coverage.
Why purchase health insurance?
You can be eligible for state benefits or sick pay from your employer if you are unable to work due to illness, an accident, or a handicap. These might not, however, satisfy all of your needs.
It's important to determine whether you might survive only on government assistance. Compare this sum to the amount you believe you would require to survive. It can be wise to consider purchasing illness insurance to increase your income.
Pension or sick compensation for the employer
You might receive contractual sick pay from your employer. If you are unable to work, you will get all or a portion of your regular wage for a predetermined amount of time.
If you must retire early due to illness, some employers will also pay your pension early, albeit the amount you receive may be less than if you had worked until retirement.
Ask your employer for more information if you are unsure of the benefits to which you are entitled if you are unable to work due to illness.
If you work for yourself
If you're self-employed and unable to receive payment from an employer or make a claim for Statutory Sick Pay, illness insurance is something to think about. However, if you're self-employed, some types of illness insurance won't cover you. Carefully review policies before purchasing one.
Types of health insurance
Critical illness protection
If you are found to have a particular illness, like cancer or a heart attack, it will pay out a lump sum. If you have a mortgage, it's possible that when you applied for your loan, critical illness insurance was sold to you. The mortgage payment protection insurance is not the same as this.
Income security coverage
This is also known as long-term care insurance. If you are unable to work due to illness or disability, it pays you an income for the rest of your life or until you reach retirement. Typically, payments don't begin for a few weeks or months.
Protection from Payment Insurance (PPI)
In the event that you become unable to work due to illness or unemployment, it will cover your mortgage, credit card, store card, or personal loan payments. Before the payments begin, you might have to wait a few months, and they usually end after a certain period of time.
Never let a provider sell you PPI without first making sure the policy fits your needs. You can file a claim for compensation if you believe that PPI was improperly sold to you.
Financial protection against mortgage payments
Only includes the cost of your mortgage. The start of payments might take a few months, and they usually end after a certain period of time.
What to think about before you take out illness insurance
Before you take out illness insurance check whether you have illness insurance combined with another insurance policy or with your mortgage.
Also check what benefits your employer pays out if you can’t work because of ill-health or disability.
You might have savings you can use instead of insurance. However, work out if your savings will cover a long period of ill-health.
What illness insurance doesn't cover
Illness insurance policies don’t always cover every illness. Some policies stipulate that in order to file a claim, you must be terminally ill or totally disabled.
Check your insurance policy to see what it will cover if you get sick because you might not be covered for ailments that you've previously experienced.
Some health insurance plans exclude coverage for pre-existing conditions. It's possible that you won't be eligible for illness insurance if you're in poor health.
You must provide your insurer with as much information as possible regarding any current or previous medical conditions you may have. You might not be able to file a claim if you don't.
How much health insurance will cost
The cost of illness insurance can be high, and if you never file a claim, you won't get a refund. It costs more as you age because your chances of filing a claim increase.
You might have trouble getting illness insurance if you have a risky or physically demanding job, or you might have to pay more to be covered.
It's possible that you won't be eligible for illness insurance if you engage in any risky hobbies or lead a lifestyle that might include smoking, binge drinking, or using drugs.
If you don't inform the insurers in advance of anything that might impact the claim, they might refuse to pay out.
When Can you assert a claim on your health insurance?
In most cases, you have to wait at least a month before filing a claim. Consider how you will support yourself during the waiting period after finding out how long it will be.
If you receive sick pay from your employer or have savings you can use for the first few months, it might be less expensive to purchase illness insurance. When your other sources of income are exhausted, you can set up illness insurance to begin paying out.