Overcoming financial pain of the battle against illness
In bowel cancer awareness month, Edmund Tirbutt assesses the budgetary fallout that arises from dealing with such diseases.
Friday 19 April 2013
If bowel cancer is treated early, there's a great chance of recovery. But survival can throw up its own financial problems. Just ask 32-year-old accountant Sarah Wills, who had a major bowel cancer operation in January 2012. Although she was able to resume her passion for playing the classical guitar two months later, a full-time return to work wasn't possible until November.
Initially, Sarah enjoyed the benefit of a generous sick-pay scheme, which meant she received her salary in full.But once that stopped in August 2012, she could turn to a £153,000 critical illness cover payout from Zurich Life. Without that, she says she would have struggled. She was able to use the cash from her insurer to pay off her mortgage on her home near Plymouth, and it also gave her valuable spending money.
"The policy was invaluable as it meant that I didn't need to worry about losing the house or running down existing savings when I wasn't earning," says Sarah.
"The money was in my bank account a month after I'd done all the paperwork. If you've got any sort of big liability which is going to be an expense, then you need the cover."
Sarah's policy, which she had taken out jointly with her 33-year-old husband Rob, cost £60.39 a month in premiums. That may sound a lot, but it also offered life insurance on the couple. Combining life and critical illness cover in this way can shave up to 15 per cent off the premium but the downside is that it can leave you uninsured. Sarah is likely to have to wait a couple of years before insurers feel she is again an acceptable risk for life cover.
For that reason, it can be worth considering paying for separate policies. In your twenties, £100,000 of standalone single-life critical illness cover can cost around £20 a month but by the time you reach your mid-forties, it can cost three times that.
The cover, which pays out a tax-free lump sum if you are diagnosed with one of a stated number of serious conditions, can be particularly good news for cancer sufferers because cancer now accounts for more than 60 per cent of payouts. The other main sources of claim are stroke, heart attack and multiple sclerosis.
Policy wordings for cancer are also more generous than ever before. But the exact terms can vary significantly between insurers.
For example, Legal & General covers all types of surgery and treatment connected to prostate cancer whereas many other insurers only make a partial payment if you actually have a prostatectomy.
Other favourable recent trends are that all major insurers now include children's cover for a proportion of the cover amount and some offer premium discounts to policyholders who are excluded for certain conditions.
Aviva, Ageas Protect, Friends Life and Zurich Life do this for both cancer and multiple sclerosis while Legal & General, LV= and PruProtect do it only for cancer. Alan Lakey, partner at Highclere Financial Services, a specialist adviser based in Hemel Hempstead in Hertfordshire, says: "None of them stipulate the amount of the discount as they calculate it on a case-by-case basis but in my experience it tends to be in the region of 15 per cent to 20 per cent."
In view of such significant cover differentials, the surest way of getting a policy best suited to your individual circumstances is to consult a specialist adviser and, as most of these receive commission from insurers, this need cost you nothing.
Such specialists can also help dispel important misconceptions that have traditionally prevented people from buying cover. Prominent among these is the idea that "these things only happen to other people".
According to consultancy Protection Review, which monitors a range of sources, the chances of suffering a critical illness before retirement age are as high as one in six. Another is the idea that critical illness insurers are always trying to wriggle out of paying claims. There was certainly some truth in this a decade ago, when only about 80 per cent of claims were paid industrywide. But guidance issued by the Association of British Insurers (ABI) in 2008 about dealing with non-disclosure more fairly, together with a much more scrupulous stance taken by insurers at the application stage, have seen average payout rates rise to more than 90%.
Mark Roberston, protection partner at Chadney Bulgin, a specialist adviser based in Fleet in Hampshire, says: "It's rubbish that they don't pay out although some clients still seem to believe this because of the bad publicity generated by some critical illness insurers in the past. If you disclose everything you are supposed to at outset, you are most unlikely to come unstuck."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Mark Dampier: Don't panic. Canny investors sit tight when the stock market falls
Shareholders can hold a company to account
Derek Pain: Dividends ease the suffering in a moribund stock market
Questions of Cash: Payment woes with Barclays overshadow Cornish holiday
Bank-beating exchange rates on your international payments
- 1 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 2 Watch what happened when food critics were unknowingly served McDonald's
- 3 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
- 4 Queen's first tweet: Reply telling Her Majesty to 'f*** off' broadcast on BBC News
- 5 #AskNigelFarage: Twitter starts hilarious Q&A for Ukip leader
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Tony Blair 'says Ed Miliband will lose 2015 general election'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Putin: The US is to blame for almost all the world's major conflicts
Poppy Appeal 2014: This is why I won't be wearing a red poppy this year
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village