How much critical illness insurance cover do I need?

You can look at insurance as an umbrella. It covers you and keeps you warm and dry. Umbrellas vary in size, but you want an umbrella that will provide you with sufficient protection when the rainy days come.

Critical illness insurance ensures that you have the funds you need at a difficult time. With today’s advanced medicine, there is an increased chance that one can recover and be well after going through a critical illness. But of course, you will need money for that.

And while the insured is alive and he only has life insurance, he can only have these options:

To surrender the policy and get the cash value.
To claim for the terminal illness benefit. But this is only if the person is reasonably not expected to survive the illness in twelve months. This is also only if the terminal illness benefit is included in the cover.

Thus, a critical illness insurance policy is a necessity if you are concerned about getting a critical illness n the future. And the fact we have to consider is that even children suffer from critical illnesses.

So how much of a critical illness umbrella do you need? If you are under insured, you will have to scrimp and save to make ends meet. More sadly, if you are not insured with critical illness insurance and get critically ill, you may have to face the possibility of selling your assets or even foreclosing on your house.

Here are some simple tips to help you determine how much critical illness insurance you need:

Calculate how much income you will need.
One benchmark is to multiply your annual income by three. This is because when you get critically ill, you may need to stop working. Multiplying by three means you can afford to rest from work for up to three years and still be able to pay your usual bills and mortgage payments.
Calculate how much expenses you will need.
Add up your monthly expenses such as rental or mortgage payments, car instalments, food, transportation, groceries, medication and home care. You can add this up and then deduct expected income from other sources, such as your spouse, Social Security and so on. Multiply the total amount and then multiply this by the number of years you expect to be laid up due to a critical illness. The minimum cover recommended would be at least 75% of your total monthly debt service payments.
Add in expected medical expenses.
To the above amounts you computed, you should also add how much you expect to spend in medical bills in case you do get critically ill. This includes expenses you may need for home care, as well as equipping your home with adaptive or medical equipment necessary for your recovery.

The amount you get will be roughly the equivalent of the sum assured you should get, if you can afford this.

Other factors to look into would be:

If there are other members of your family who are earning an income
If there are expected increases in expense in the near future (such as your child going off to college)
The size of your debt, such as your mortgage and the length of time you will be paying this off
The amount you need to pay each month in order to service your debts

Cover Details
Type of Insurance
Type of cover
Over what period?
Amount of cover
Type of premium
Personal Details
Title
First Name
Last Name
Date of birth
Do you smoke?	No Yes
Email address
Home phone
Work phone
Mobile Phone
Is this a joint application?	No Yes
App. 2: Title
App. 2: First Name
App. 2: Last Name
App. 2: Date of birth
App. 2: Do you smoke?	No Yes
House Number
House/Flat name
Street
Area
Town
County
Postcode