How much critical illness cover do i need?

Critical illness cover provides a one-off lump-sum payout if you’re diagnosed with a serious condition defined in your policy (e.g., heart attack, stroke, cancer). Deciding how much cover to take requires reviewing your financial commitments, income risk and assets to ensure your protection is meaningful and affordable.

🟩 Quick Definition 

Critical illness cover is a policy that pays a lump sum if you are diagnosed with a covered serious illness — the amount you need depends on your debts, income loss risk, medical costs and lifestyle expenses.

How to Determine the Right Coverage Amount

1. Calculate Your Financial Obligations

• Look at outstanding debts: mortgage, personal loans, credit cards.

• Consider future living expenses: household bills, childcare, education fees.

• Estimate additional costs: specialist treatments, home modifications, travel for medical care.

2. Factor in Income Loss & Recovery Time

• If you’re unable to work for months or longer, how much income would you lose?

• Estimate the number of months you’d want covered, and multiply by your monthly income.

• Don’t forget that even after treatment you may need time off work or support at home.

3. Account for Your Existing Savings & Benefits

• Subtract emergency funds, savings, or any existing coverage you already have.

• If you have disability or life insurance, factor in what those policies might pay.

• Consider what state or employer-provided benefits might cover during illness.

4. Set a Cover Target & Adjust for Affordability

• Some advisers suggest taking cover of 3-5 times your annual income as a guideline.

• Alternatively set the cover to match your liabilities + income risk after savings.

• Choose a premium you can maintain long term — it’s better to have moderate cover you can keep than high cover you cancel later.

Typical Cost & Benefit Amounts

• Many critical illness policies offer benefit amounts ranging from $5,000 to $100,000 or more.

• Premiums increase with age, whether you smoke, your health history, and the amount of benefit you choose.

• For example, a basic policy for younger age might cost only a few dollars per month, while older applicants choosing high benefit amounts pay significantly more.

FAQs

Q1. Does critical illness cover replace life insurance?
Not exactly. Life insurance pays out on death; critical illness cover pays on diagnosis of a serious illness and helps cover income loss and extra costs. You may need both depending on your situation.

Q2. Can I get by with minimal coverage?
Some coverage is certainly better than none. But if you choose very low cover and suffer a major illness, you may still face significant costs or income loss not covered.

Q3. Should I increase cover if I have dependents?
Yes. If others depend on your income or you have high household expenses, a higher cover amount is wise to protect your family’s standard of living.

Q4. When should I review my critical illness cover?
Annually or whenever your income, debts, assets or family situation changes — such as having a child, buying a home, or changing jobs.

Q5. Can premiums go up each year?
Some plans have level premiums; others may increase with age. Make sure you understand whether the premium is fixed or gradually increases.

Final Thoughts

Choosing the right amount of critical illness cover involves balancing your financial risks, debts, income loss and savings. Start by listing your liabilities and income needs, subtract what you already have, then choose a benefit you can afford and maintain. With the right cover in place, you can focus on recovery—not financial stress.