Why cover?
  • affects 1 in 4 women / 1 in 5 men before retirement
  • 94.1% of the critical illness claims are paid
  • protect yourself and your family if you get seriously ill
Why us?
  • get the cover that will pay when you need it
  • save up to 35%, cover from £5 a month
  • free, fast and without obligation quotes
Insurers: Aviva, Legal & General, Liverpool Victoria, Scottish Widows, Vitality, Zurich

Critical Illness vs. Long Term Care insurance: What are the differences?

Basically, long term care insurance (as the name suggests) will pay for long term care – in home or nursing care when you can’t take care of yourself. In contrast, critical illness insurance is a lump sum amount that the insured will receive and use to pay for anything – be that long term care, mortgage payments and any other expense.

Why Get Long Term Care Insurance?

UK’s aging population is growing. And with this growth comes the increasing need for aid in the basic activities of daily living. This can be provided through:

  • At-home nursing care
  • Assisted living facilities
  • Nursing homes
  • Adult day care facility

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However, the problem comes when you need to avail of these services for the long term. The first few months can easily be paid for by your savings. However, over time, paying for long term care will seriously drain your finances. With the fees needed to cover long term care, seniors may be forced to:

  • File a bankruptcy
  • Make do with government-provided options, even when these are not the preferred options
  • Sell a fully-paid-up home even when the other spouse is still healthy and needs housing
  • Liquidate assets that may be earmarked for inheritance of loved ones

There are instances when seniors are forced to sell their homes or file bankruptcies just to be able to meet the fees for long term care.

Paying for Long Term Care Insurance

Long Term Care Insurance premiums are based on the following:

  • Pay period selected
  • Amount of cover based on the type of care selected
  • Waiting period – whether there is one and how long
  • The applicant’s physical condition: age, health status

What is the difference between Critical Illness Cover and Long Term Care Insurance?

Below is a table that compares the features and benefits of the two:

  Long Term Care Insurance Critical Illness Insurance

Daily cash benefits that are paid to cover the costs of long term care – this can be through home care, nursing home care, an assisted living facility or an adult day care facility. The daily payments are subject to a maximum benefit.

The insured receives a lump sum payment.

Control of funds

The daily payments are limited to the benefits being covered.

The insured has the discretion on how he will use the funds.

Duration of payment

Payments can last until the person’s lifetime, or until the maximum payment period is reached.

This usually involves a one-time payment and the policy will cease to be effective once the payment is made.

Basis for payment

Payments are based on whether the insured needs long term care – the insured basically is not able to perform daily functions by himself. The disease is not looked upon as a basis. The policy will pay if you cannot do the following functions by yourself:

  • Eating
  • Bathing and dressing
  • Using the toilet
  • Getting in and out of the bed or chair
  • Control of the bladder and bowels

Payments are based on diagnosis of a covered critical illness. You can still be able to perform daily activities and still receive the proceeds as long as you are diagnosed with the critical illness. This includes the following critical illnesses:

  • Organ failure necessitating a major organ transplant
  • Stroke
  • Cancer
  • Total blindness or deafness
Minimum age

You can buy this policy, even if you are past 60 years old.

It doesn’t make sense for you to buy this at 60 years old or above, since some critical illnesses are only covered if the disease is diagnosed before the insured turns 60.

Reason for getting this cover

Desire to protect assets from long-term expenses – you want to preserve the assets to leave as an inheritance.

Payment to pay primarily for treatment of the critical illness, although the money can be used for a variety of purposes.

Pros and Cons of Critical Illness vs. Long Term Care

  Critical Illness Cover Long Term Care Insurance
  • Provides a lump sum that you are free to use as you see fit.
  • Can still receive State benefits even if you make a successful claim
  • You stand to receive a considerable lump sum which you can use to pay off a mortgage or get the kind of treatment you want.
  • This can pay for costs not provided by other insurance covers.
  • Payments based on one’s ability to perform daily activities and not on diagnosis of a critical illness
  • Ensures that you get the care that you need without draining your finances
  • Provides you the freedom to choose the kind of Long Term Care facilities you want.
  • Continues with the payments until the maximum benefits are exhausted
  • The cover provides a one-time payment only. After the claim for the main benefit is made, the policy is no longer effective.
  • You need to meet the definition of the critical illness as stipulated in the policy for the claim to be payable.
  • May not be advisable if leaving an inheritance is not a concern
  • May not be advisable if you have little or no savings and can qualify for Medicaid or other state or local community benefits

Want to know about other health-related insurance covers? Here are articles about some options to think about:

Last updated on: 18.1.2013

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