Using Your Critical Illness Insurance Benefits

Article published on 21st July 2008

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If you make a valid claim on your Critical Illness Insurance (CII) policy, how you then choose to use the tax free lump sum of money you get from it is entirely up to you - within the bounds of the law of course!

For many this will mean that the money is used to keep their household running as normal, buying groceries, paying for utilities and perhaps their mortgage as well. However, if there is another income in your household to cover most monthly expenses or if your insurance cover is substantial enough, you could use your CII benefit to clear outstanding debts, such as child care or school fees, overdrafts or credit card bills.

The most important thing - and this is the prime reason for getting yourself a Critical Illness Insurance policy - is that any benefit you are paid will allow you to come to terms with the new circumstances brought about by your condition or illness, within which time you can adapt to whatever changes that need to be made to how you live your life.

Benefits from Critical Illness Insurance policies only pay out if you survive the illness or the accident that puts you into the 'critical' designation. It isn't life insurance that pays out if you die unexpectedly. Obviously, it is best to look for a policy that requires a shorter survival time before it starts paying out - so, in other words, that pays out sooner rather than later, because if you have a serious cancer (as an example) you and your family probably won't want to wait around and worry for months while waiting for your insurance cover to come through to help with mounting debts.

There are some policies that combine critical illness insurance and life insurance, and if you can find a competitive deal this sort of policy might be a good one to go for. It would mean that you and your family get financial help right through your period of illness and also after death if the condition progresses that far. It's a grim topic area, but an important one to consider.

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