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When a person decides to take out a critical illness policy there are several decisions they need to make, including level of coverage, life of the policy and if its suitable to take out partnership critical illness insurance. They also need to decide if they will go with guaranteed or variable critical illness coverage. In guaranteed coverage, the premiums will remain the same throughout the life of the policy. So what you pay at the beginning will be the same at the end, the premiums are guaranteed. Many experts believe that you will save money over the life of the policy. With variable critical illness insurance, the premiums will change or vary over the life of the policy. Generally the premiums start out lower and could increase over time. Often there are predetermined reviews of the policy, perhaps every five years, and at that time the variable critical illness cover premiums could go up, remain the same or go down.
Variable Critical illness - Variable critical illness insurance - Variable critical illness cover
There are different reasons why someone might choose a variable critical illness policy over a policy with guaranteed premiums. It may be that it is tied in with their other insurance policies, such as life insurance, and that is how the bundle is structured or that that are part of a partnership critical illness cover. Another reason is the initial affordability of the premiums. Many young people are on limited budgets so they can only afford the lower starting premiums that variable critical illness insurance offers. Their hope is that if the premiums go up in the future, they will be making more money and be able to afford the higher payments should this occur. This is an important consideration because if the policy holder fails to make payments the policy is cancelled. Therefore, they should be prepared for rising premiums and confident that they will be able to pay them.
One important aspect of these policies is that generally there is no investment component, meaning it does not accrue value. Once the variable critical illness cover term ends, and you have not filed a claim, the policy is over. These policies are usually meant to cover mortgages or bills in the event the policy holder cannot work, so they have specific lengths. People considering critical illness insurance should meet with their insurance advisor and discuss their options and needs.
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