What is the difference between life insurance and critical illness cover?
Life insurance pays out a lump sum to your beneficiaries if you pass away during the term of the policy. It’s designed to provide financial support to loved ones by covering costs like mortgages, debts, or future living expenses. Critical illness cover, on the other hand, pays out if you’re diagnosed with a serious condition listed in the policy — such as cancer, heart attack, or stroke. It’s a one-time payment to help you focus on recovery without worrying about lost income or medical bills. Birmingham brokers often recommend combining both for more comprehensive protection, especially for families, homeowners, or business owners with financial dependents.
How much life insurance do I need?
The amount of cover you need depends on your financial responsibilities and long-term plans. Consider your mortgage balance, family living costs, outstanding debts, and future expenses like university fees. A Birmingham broker will help you calculate a realistic figure and choose between level term, decreasing term, or whole-of-life policies. They’ll also assess how long the policy should last — often until your children reach adulthood or your mortgage is paid off. Getting the balance right means your family will be properly supported without you paying more than necessary. It’s all about matching cover to your lifestyle, not just picking a round number.
Is critical illness cover worth having?
Critical illness cover can be a financial lifeline if you’re diagnosed with a serious health condition. It gives you a lump sum to help with treatment costs, lost income, or changes to your home or lifestyle. In Birmingham, where NHS waiting lists and living costs are rising, this kind of protection is increasingly popular among families and the self-employed. A local broker can explain what’s covered and help tailor the policy to your medical history, occupation, and budget. While it’s not a legal requirement, it offers valuable peace of mind — especially if your household depends on your income.
Can I get life insurance if I have a health condition?
Yes — although it might be more complex, it’s definitely possible. Many insurers will still offer cover, especially if your condition is well managed. Birmingham brokers can access a wider panel of insurers, including those who specialise in covering people with pre-existing health conditions. They’ll guide you through the application process, help with medical disclosures, and ensure you get fair terms. In some cases, you may face higher premiums or policy exclusions, but a broker’s knowledge can make a big difference. They’ll know which providers are most sympathetic to your condition and how to present your application clearly.
Do life and critical illness policies pay out tax-free?
In most cases, yes — life insurance payouts are typically tax-free if written into a trust. Critical illness cover is also paid out tax-free as a lump sum. However, if your life insurance payout increases the value of your estate above the inheritance tax threshold, it may be subject to tax. Birmingham brokers often recommend placing the policy in trust to avoid this, ensuring the money goes directly to your beneficiaries without delays or deductions. They can explain how this works and even help you complete the trust forms. It’s a simple step that can save your family thousands down the line.
Can I combine life insurance and critical illness cover?
Yes — many providers offer a combined policy that covers both life and critical illness under a single plan. It’s usually more cost-effective than buying two separate policies and provides a single payout either on death or diagnosis of a specified illness. However, once a claim is made for one, the policy typically ends. A Birmingham broker will help you understand the pros and cons of combined vs separate policies based on your circumstances. If you want ongoing life cover after a critical illness claim, separate policies might be better. It’s all about striking the right balance between cost and protection.
What happens if I change jobs or move house?
Your life and critical illness cover stays with you, even if you change jobs, become self-employed, or move home. However, it’s wise to review your policy if your circumstances change. For example, if you’ve taken on a larger mortgage or had children, you may need more cover. Birmingham brokers offer regular policy reviews and can adjust your cover accordingly. They’ll make sure your policy still meets your needs without you paying over the odds. It’s one of the key benefits of working with a broker — you get long-term support, not just a one-off sale.
Can I get cover if I smoke or have a risky job?
Yes, but your premiums may be higher. Insurers consider smoking, hazardous hobbies, and high-risk occupations as increased risks. A Birmingham broker can help you find insurers that are more understanding of your lifestyle or job role. Whether you’re a construction worker, pilot, or have a passion for rock climbing, there are specialist providers who won’t automatically penalise you. Brokers also know which insurers offer better terms for those who have quit smoking for over a year. They’ll ensure your policy reflects your true level of risk, helping you get fair cover without excessive costs.
How do I make sure my family gets the payout quickly?
The best way is to place your life policy in trust. This keeps the payout separate from your estate, avoids probate delays, and ensures the money goes straight to your beneficiaries. A Birmingham broker will explain how to do this and provide the correct trust forms. Keeping your beneficiaries up to date and informing your loved ones where the documents are stored also helps. With critical illness cover, the claim process usually starts with a diagnosis letter from your consultant. Your broker will help you gather paperwork, submit your claim correctly, and chase progress. Their support ensures everything moves smoothly during a difficult time.
