Specified Illness Cover

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The recent worldwide pandemic proved that we cannot be certain what may happen in the future, particularly with our health.

In some cases, without warning, something untoward may happen to leave you in a vulnerable position. If you have a young family or dependents, a Specified Illness Policy may be something to consider.

Specified Illness Cover or Critical illness Cover as it is sometimes known, may alleviate the financial headaches and stress associated with becoming ill.

Whereas Life Insurance and Mortgage Protection are designed to help your family when you are gone, Specified Illness Cover is designed to provide financial assistance giving you time to recover.

What is Specified Illness Cover?

Specified Illness Cover pays out a tax-free lump sum should you be diagnosed with one of the illnesses outlined in your policy.

In many cases, Specified Illness Cover is used as an ‘add-on’ to other policies such as Life Insurance. However, it can also be purchased on its own.

Specified Illness cover can be beneficial should you suffer an illness and be unable to work for a period of time. Once you are diagnosed with an illness agreed to in your policy, you will be eligible for a tax-free lump sum.

The amount you are eligible for will be agreed upon at the outset of your policy.  

Key note 📌
You must be diagnosed with a Specific Illness that is covered in your policy in order to be in a position to make a claim.
Monthly payments
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What can Specified Illness Cover pay for?

The size of lump sum you receive will be determined by your policy.

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Our team are on hand to answer any questions you may have with regard to Specified Illness Cover.

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How much does Specified Illness Cover cost?

The cost of a Specified Illness Cover will depend on certain variables. These include:

Age

Health

Term of Cover

Amount of Cover

Smoker

Whether you have Income Protection or not should also play a factor. Your Specified Serious Illness policy may pay out a lump sum. However, an income protection policy will pay out monthly until you can return to work.

When it comes to how much Specified Serious Illness cover you may need, there is no universal answer. A good rule of thumb is approximately €50,000. Essentially whatever is enough to cover a full year without having any financial headaches giving the opportunity to concentrate on getting better.

Is Specified Illness Cover right for you?

Your need for Specified Illness Cover will depend on your overall financial situation. If you have no cover for ill-health and would like to put a safeguard in place it may be a viable option.

How to assess eligibility?

If you would prefer to discuss eligibility over the phone, feel free to contact our team to assess potential options.

How emero can help you get Specified Illness Cover

We can help you get covered in 3 easy steps.
1.

Calculate the cover required

Calculating the appropriate level of cover needed for your situation is the first step. A quick assessment will allow us to assess your situation and determine the correct cover you will need.
2.

Search the market

At emero, we have access to all of Ireland’s largest life insurance companies. This gives us the ability to compare the entire market and allows you to ensure you get the best possible quote.

3.

Protect your Income

The final step is to put cover in place and ensure that your income is protected. From here our team will liaise with you and move through the final steps before receiving your documentation.
1.
Calculate the cover required
Calculating the appropriate level of cover needed for your situation is the first step. A quick assessment will allow us to assess your situation and determine the correct cover you will need.
2.
Search the market

At emero, we have access to all of Ireland’s largest life insurance companies. This gives us the ability to compare the entire market and allows you to ensure you get the best possible quote.

3.
Protect your Income
The final step is to put cover in place and ensure that your income is protected. From here our team will liaise with you and move through the final steps before receiving your documentation.

Unsure of what cover may be most suitable?

It can sometimes be difficult to assess what type of cover is most suitable to your specific needs. Feel free to call our team who can answer any questions you may have and help you assess potential options.

Why Income Protection Insurance may be a better idea?

Whereas Specified Illness Cover will only cover specific illnesses outlined in a policy, Income Protection Insurance will kick in should you be unable to work due to any sickness, injury, or disability.

Income Protection Insurance will also continue to pay out until either you are to return to work or retire.

We pride ourselves on supporting our clients by providing comprehensive guides on various types of cover.

You are welcome to check out the information below.
emero

Editorial Staff

Last Update: Aug 2022

If considering, Specified Illness Cover it is important to know it is not designed to replace your income should you be unable to work long term.

It is designed to provide you with a lump sum after the diagnosis of an illness to assist your recovery and relieve some financial stress.

It is also worth noting that you must be diagnosed with an illness that is covered in your policy. Just because an illness is keeping you from working does not automatically mean it will be covered.

Be sure to discuss your policy with your advisor and consider all potential options. In some cases, Income Protection Insurance may be a more suitable option.

Standalone Specified Illness Cover

With a standalone policy, it will be singular and not as an add-on to a separate policy.     

In some cases, a Specified Illness policy can be added to a life insurance policy

Accelerated Serious Illness

A more common way we see Specified Illness policies is as part of an add-on to another policy.

Many people will add Specified Serious Illness to their Life Insurance or Mortgage Protection policies. Adding accelerated serious illness to your policy will increase the cost of premiums but provide additional benefits should you become ill with an illness listed in your policy.

Premiums with vs without Specified Illness Cover

Below we look at how adding Specified Illness to a Life Insurance policy may affect the monthly premium.

In this example, we take a 35-year-old, non-smoker who is looking for a Life Insurance policy for over 20 years for €200,000.

They would also like to add €100,000 Specified Illness cover.

Life Insurance – without serious illness cover€14.36 per month
Life Insurance – with serious illness cover€46.23 per month
Difference€31.87

The above table illustrates the difference in premiums when considering Specified Serious Illness as an addition to a Life Insurance policy. There was an increase in premiums of €31.87 per month.

What illness will be covered?

It is important to note that only the specified conditions in your policy will be covered under your policy.

Do not assume a particular illness is covered, if unsure, ask for clarity. It is not as simple as if you cannot work due to an illness that your policy will be paid.

In fact, many illnesses that may keep you from working may not be covered. This is where income protection  may be a more suitable option.

Most insurers break they payments into two categories:

  • A list of conditions that will entitle the policyholder to full
  • A list of conditions that will entitle the policyholder to partial

Not all policies will be the same. Depending on the insurer you choose, they will have a set list of illnesses they cover.

Always check with your broker or insurer for specific details. However, most insurers will include the following:

  • Heart attack
  • Stroke
  • Certain types of cancer (check policy details)
  • Kidney failure
  • Parkinson’s Disease
  • Multiple Sclerosis
  • Benign brain tumour
  • Blindness
  • Major organ transplant

The above illness would account for approximately 90% of claims. Receiving a claim may also depend on the severity of the illness suffered.

For example, a minor stroke may not be covered under the policy.

link to guide to income protection

Serious Illness Claims – Statistics

Unfortunately, the rates of serious illnesses have not dropped in recent times.

Almost 45,000 people in Ireland are diagnosed with Cancer each year. This includes almost 25,000 invasive treatments with a breakdown of 13,152 men and 11,641 women source – cancer.ie

decreasing term cover

Some other worrying statistics in Ireland are:

  • 1 in 3 men will get cancer by age 75
  • 1 in 4 women will get cancer by age 75
  • Almost 10,000 people suffer a stroke each year.

(Source – national cancer registry 2017)

Please Note  📌

When choosing a policy, it is important you consider the definitions of the illnesses covered. In  some policies, even when diagnosed with an illness, the condition may have to be extreme before a claim can be made.

Do I need Specified Illness Cover?

Whether or not you need a Specified Illness cover will likely depend on several variables.

If you have no other cover for ill health or would be financially vulnerable should you become ill, having a policy in place is worthwhile.

The lump sum you receive from a Specified Illness payment can be used to pay for a multitude of things. What you choose to use it for will depend on your personal circumstance.

Why Income Protection may be a better option

If eligible, Income Protection  is often a better option than Specified Illness Cover.

Whereas Specified Illness Cover does what it intended to and covers specific illnesses, Income Protection will cover you should you be unable to work due to any sickness or injury.

With Income Protection, you can choose to protect a certain percentage of your income, usually to a maximum of 75%.

Should you then be unable to work due to sickness or injury, Income Protection will continue paying these benefits until you are fit to return to work.

A major benefit of income protection is that you will also receive tax relief on your premiums at your marginal tax rate.

Therefore, if you are in the 40% income tax bracket, a €100 per month policy will in-fact cost you €60.

Income Protection is a tax-efficient way of protecting your most important asset, your income. Without regular money coming in, everything else may suffer.

Another advantage of Income Protection over Specified Illness Cover is that it does not have to be a once-off payment. With Income Protection, your plan will stay in place even after you have claimed should you continue paying your premiums.

Does cancer cover fall under Specified Illness Cover?

Some forms of Cancer may fall under your policy. However, this may differ depending on your insurer.

There is also a specific policy available solely for Cancer cover. In general, this could cover cancers such as:

  • Breast
  • Prostate
  • Bowel
  • Lung
  • Testicular
  • Skin cancer

Again, this cover will pay out should you be diagnosed with cancer that is within your policy terms. Cancer cover may also be an option for those who have been refused Specified Illness Cover.

What is permanent total disability cover?

Permanent total disability cover may be included in certain Specified Illness policies. It allows in certain circumstances that should you become permanently disables from a condition not specified in your policy, you may be eligible to claim the Serious Illness benefit.

Within permanent total disability cover, it is broken down into:

  • Any occupation – meaning you are only eligible to claim if you are unable to work any job.
  • Own occupation – meaning you can only claim if you are unable to do your current job.

These additional stipulations will change depending on your insurer. If in doubt, it is worth asking your broker or insurer directly for more details.

Benefits of Specified Illness cover

Specified Illness Cover has the potential to pay out a tax-free lump sum should you be diagnosed with an illness agreed in your policy.

Therefore, should income protection not be an option, it is something that should be considered.

Some of the benefits of a Specified Illness policy include:

  • You and your family will receive a tax-free lump sum payout
  • It can be added to or combined with a life insurance policy
  • You can take out a policy while not working
  • The tax-free lump sum can be used as you see fit

Drawbacks of Specified Illness cover

Some of the drawbacks associated with a Specified Illness policy:

  • It does not cover pre-existing conditions
  • A claim will only be paid should your condition fall under a definition in your policy
  • Not all cancers and other forms of illnesses are covered
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Specified Illness Cover - FAQ's  

The terms of your policy will be agreed at the outset. In many cases, policies range from 10 to 40 years.

Yes. Each provider will have different terms and benefits  offered within the policies. The specific illness that is covered may also vary by provider. Therefore, it is important to discuss such aspects with your advisor before taking out a policy.

This will depend on several factors. Budget is usually the main decision-maker. The policies are designed to meet a different set of circumstances. If you feel both may be an option or are unsure about which to choose, please feel free to contact our team.

We can assess your situation and help point you in the right direction.

Specified Illness cover will pay out a benefit on the diagnosis of a specific illness outlined in your policy.

Income Protection will pay out a monthly benefit should you be unable to work due to illness or injury. This benefit will be paid either until you can return to work or reach the retirement age outlined in your policy.

Yes. There is a myth that you are unable to switch your Mortgage Protection policy but this is untrue. As with any type of insurance, you are free to survey the market.

In some cases, you may be able to find a cheaper policy by shopping around. All insurers will quote based on the same factors such as age, smoking status, amount of cover needed, and the term.

However, if you were previously a smoker when you originally started your Mortgage Protection policy there may be potential savings to be made.

Pro Tip 📌

Do not cancel your current Mortgage Protection policy until your new policy has been issued.

If you are considering switching to a new provider, start by contacting a member of our team.

From here we can assist and see whether there are savings that can be made. In some cases, keeping your current policy may be the best course of action.

Yes. There is a myth that you are unable to switch your Mortgage Protection policy but this is untrue. As with any type of insurance, you are free to survey the market.

In some cases, you may be able to find a cheaper policy by shopping around. All insurers will quote based on the same factors such as age, smoking status, amount of cover needed, and the term.

However, if you were previously a smoker when you originally started your Mortgage Protection policy there may be potential savings to be made.

Pro Tip 📌

Do not cancel your current Mortgage Protection policy until your new policy has been issued.

If you are considering switching to a new provider, start by contacting a member of our team.

From here we can assist and see whether there are savings that can be made. In some cases, keeping your current policy may be the best course of action.

Yes. There is a myth that you are unable to switch your Mortgage Protection policy but this is untrue. As with any type of insurance, you are free to survey the market.

In some cases, you may be able to find a cheaper policy by shopping around. All insurers will quote based on the same factors such as age, smoking status, amount of cover needed, and the term.

However, if you were previously a smoker when you originally started your Mortgage Protection policy there may be potential savings to be made.

Pro Tip 📌

Do not cancel your current Mortgage Protection policy until your new policy has been issued.

If you are considering switching to a new provider, start by contacting a member of our team.

From here we can assist and see whether there are savings that can be made. In some cases, keeping your current policy may be the best course of action.

Yes. emero is authorised and regulated by the Central Bank of Ireland.

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