Expat working overseas? Finances "all sorted"?.. Think again, if you don’t have critical illness cover.

1/5/2023.  When I go through my bank statement each month, the most important outgoing I check for is the premium for my critical illness cover.

Why?  Because I know that if I get hit with a serious illness and can’t work for a few months or longer, all my financial commitments are covered - without having to dip into my retirement savings.   Instead of stressing about school fees, the mortgage, loan repayments, utility bills and other household expenses, I can simply focus on treatment and recovery.

There’s an incredible calmness and peace-of-mind that comes from knowing that even if the worst happens, the worst won’t happen.

Not Medical Insurance

Critical illness cover is not to be confused with medical insurance.  They serve completely different purposes.  Medical insurance pays only for your hospital bills.  Whereas critical illness cover pays for everything else – the policy pays out a lump sum if you get one of a range of serious illnesses and conditions, such as coronary heart disease, stroke, cancer, etc - and you can use that cash for anything you like.  

Many experts suggest buying critical illness cover equivalent to two years’ worth of income, to give yourself choices when you need them most.

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Essential for Expats

Critical illness cover is especially important for expatriates.  In many popular locations, statutory sick pay is minimal – perhaps an entitlement for only one or two months of salary if you get ill.  And generally expats aren’t entitled to the same government benefits and allowances that locals have.

Life Insurance Doesn’t Pay Out If You Survive, Critical Illness Cover Does

Improvements in treatments for leading causes of death such as coronary heart disease, stroke, cancer, and diabetes mean that people are living longer, but not necessarily in good health.  A non-smoking male is four times more likely to get a serious illness and survive, than he is to die during his career lifetime.

Naturally, the largest number of critical illness claims are due to same leading causes of death.  According to the UK’s Association of British Insurers, in 2019 (i.e. pre-Covid) a total of £1.2 billion was paid out in critical illness insurance claims.  The most common reasons for a claim being cancer, heart attack, and stroke.

Table - Percentage of Global Deaths By Non-Communicable Disease

Cause of Death Male Female Both Sexes
Cardiovascular diseases 35% 29% 32%
Cancers 21% 15% 18%
Chronic respiratory diseases 6% 5% 6%
Diabetes 4% 3% 3%
Dementia (inc. Alzheimer's) 2% 3% 2%

Source: WHO, 2019.

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Critical Illness Is Not Expensive – Don’t Skimp

What if you knew 100% that you were going to get a serious illness and need to make a claim on your critical illness policy?  How much cover would you buy?  Most likely, as much as you could afford.

How about if the chance of a serious illness was ‘only’ 50%?  How much cover would you buy?  Maybe a bit less; but certainly, definitely, not nothing.

According to according to the American Cancer Society, about 1 in 3 men will develop cancer.  Statistics from Cancer Research UK have this figure at about 1 in 2.5 men.  

And according to the American Heart Association, about 1 in 2 men will develop cardiovascular disease.  In the UK, the British Heart Foundation says that around 1 in 3 men are living with some form of cardiovascular disease, which includes coronary heart disease, heart failure, and peripheral arterial disease.

Critical Illness Cover is for YOU

Unlike life insurance, which is for the benefit of your dependents, critical illness cover benefits you directly – protecting your lifestyle, your financial stability, and your future plans – when you get hit with a serious health condition.

Critical illness cover is an essential part of financial planning – it’s an investment in the future you.