What’s the Difference between Additional and Accelerated Serious Illness Cover?

Remember being 14 or 15 in maths class in school?

Your teacher, probably a bit of a gowl, would spend ages explaining the complicated maths on the board, and then he’d ask you if you understood.

You probably didn’t, but you said ‘yes’ anyway because you didn’t want to look like stupid.

Next thing you know, Mr McGowl has asked you to come up to the board to solve an equation for ‘x’. You couldn’t find that ‘x’ if it was inscribed onto your forehead.

And all you can do is go up there and write some crap on the board while Mc Gowl tuts away.

The insurers quite often play this game when they name and explain things.

Even with the best intentions (I’ll let you consider how true that might be), they have a way of explaining things so that you can’t figure it out.

An example?

Serious Illness Cover.

Which is also called Critical Illness Cover.

And Specified Illness Cover.

It’s all the same thing.

But then it gets nuttier.

You’ve also got a choice between

Standalone Specified/Serious/Critical Illness cover,
Additional Specified/Serious/Critical Illness cover
and Accelerated Specified/Serious/Critical Illness cover.

Are you tracking how many variables of the same thing that adds up to?

It’s more than you can count on one hand – but it’s actually only three different types of the same thing.

McGowl strikes again.

What is Serious Illness Cover

Serious Illness Cover, also known as Critical or Specified Illness Cover (because why have one name when you can have three?), is an insurance policy that says, “If you get sick with one of the specific illnesses we’ve listed – think of the big, scary ones like cancer, heart attacks, or strokes – we’re going to give you a lump sum of cash.

For the sake of my typing hands and sanity, we’ll just call it Serious Illness Cover from now on in. Good?

Good.

At its simplest, Serious Illness Cover (and all its subtypes) pays you a tax-free lump sum if you get sick with one of the illnesses named in your policy. 

To explain, let’s play a game called ‘Will It Pay Out?’ – Serious Illness Cover edition.

It’s a bit like ‘Deal or No Deal,’ but instead of briefcases, we have illnesses, and instead of Moel Edmonds (or Stephen Mulhern for our younger viewers), you goe me.

So, let’s say you buy serious illness cover in Ireland.

Your policy has a list of illnesses longer than a Dublin taxi queue at 3 a.m. These are your covered illnesses—the ones that’ll make your policy pay out like a Vegas slot machine.

Example of an Illness That Would Pay Out:

Take heart attacks, the classic. It’s not the nicest topic, but if you have a heart attack as defined in your policy, bingo! You’re in payout territory. The insurance company looks at your claim, nods, and says, “Yes, this is exactly why we’re here,” and hands over the cash.

This money can be a financial lifesaver while you’re recovering.

Example of an Illness That Wouldn’t Pay Out:

Now, on the flip side, let’s talk about something less straightforward – say, a mild form of a non-life-threatening condition, like a very minor stroke or a less severe case of a listed illness.

Remember, your policy has specific definitions of all of the illnesses covered. If your condition doesn’t meet the policy’s fine print definition, there is no payout.

The moral of the story? It’s all in the fine print, my friends. Like a good detective novel, the devil’s in the details.

If you’re considering serious illness cover in Ireland, know exactly which illnesses are covered.

It’s the difference between a comforting financial pat on the back and a cold shoulder from your insurance when you need it most.

(By the way, you can avoid all this definition mumbo-jumbo  by choosing  Income Protection Insurance instead, but that’s a whole other blog post.)

John buys €100,000 Standalone Serious Illness Cover, and he suffers a heart attack covered in his policy.

Poor John.

John makes a claim and gets the €100,000 tax-free cash, which obviously helps enormously with his recovery.

His serious illness cover ends, but he doesn’t have to worry about work or money for a bit.

All clear?

That’s Independent/Standalone Serious Illness Cover in a nutshell.

Accelerated Serious Illness Cover

Your first thought might be,

sure it has ‘Accelerated’ in the title. It must be class.

The ‘Accelerated’ has absolutely nothing to do with getting paid faster, so remove that notion from your mind.

Accelerated Serious Illness Cover is a bit like a kangaroo, and it’s Joey.

It’s attached to another policy, usually a Life Insurance or Mortgage Protection policy.

Yes, I know we’re starting to get tangled up with lots of terms here, but remember what I said about confusedly trying to solve for ‘x’ on the blackboard? This is like that.

Now, Accelerated Serious Illness Cover has a hiccup, which we’ll get into in a second, but basically, any pay-out will reduce the amount of the attached Life Insurance or Mortgage Protection cover.

Don’t worry; I have examples!

Accelerated Serious Illness Coverage and Life Insurance

John buys €500,000 Life Insurance and €100,000 Accelerated Serious Illness Cover.
He makes a successful Serious Illness claim.
The insurer pays 1John €100,000 tax-free cash.
But his Life Insurance reduces by €100,000, so he’s left with a Life Insurance policy of €400,000 that pays out on death.

You’ve just taken a slice from your life cover pie.

Accelerated  Serious Illness Cover and Mortgage Protection

If your Joey—sorry, your Accelerated Cover— is attached to Mortgage Protection, it gets more interesting.

Mortgage Protection decreases over time as you pay off your mortgage.

So, the amount available for a serious illness claim decreases, too, and whatever illness you claim is also deducted from what’s left for Mortgage Protection.

John buys €500,000 Mortgage Protection and €100,000 Accelerated Serious Illness Cover.
He makes a successful claim in year 20 of the policy for cancer.
By year 20, John’s mortgage protection cover had been reduced to €250,000, and his serious illness was €50,000, so €50,000 tax-free cash would be paid by the insurer to the bank (not to John).
The bank then pays €50k off John’s mortgage.
His mortgage protection has been reduced by €50,000, so now, he has a mortgage protection policy with a balance of €200,000.

So when you buy Accelerated Serious Illness Cover on a Mortgage Protection policy, the actual amount that will pay out could be far less than anticipated.

It’s complicated, so take a minute to reread.

I’ll wait for you.

Additional Serious Illness Cover

Additional Serious Illness Cover is more straightforward.

You buy it as an add-on to your Life Insurance cover.

Let’s look at John again.

Wait.

Where’s John gone?

JOHN! YOUR DINNER’S READY.

He’s back.

He’s had a rough day, in fairness.

John buys €500,000 Life Insurance and €100,000 Additional Serious Illness Cover.
He makes a successful Serious Illness claim.
The insurer pays him €100,000 tax-free cash.
His life cover is unaffected and continues at €500,000.

All good there 😅

Should you buy Accelerated or Additional Serious Illness Cover?

Serious Illness Cover and Mortgage Protection,

If you’re thinking of bundling Serious Illness Cover and Mortgage Protection, don’t do it unless you understand clearly:

The bank gets the payout
the payout may be a lot less than you anticipated

If you’re happy with that, then buying accelerated illness cover on a mortgage protection policy is an affordable way to make sure your biggest debt is cleared should you get a specified serious illness.

Serious Illness Cover and Life Insurance

Buy it on an Accelerated basis but increase your Life Insurance by the amount of the Serious Illness Cover.

Here’s John to explain:

John is deciding whether to go for Policy A or B below.

A) €250,000 life cover and €50,000 additional serious illness cover comes in at €70.37

B) €300,000 life cover and €50,000 accelerated serious illness cover comes in at €69.73

If John contracts a specified serious illness, €50,000 will be paid out on A or B.

If John dies, €250,000 will be paid out on A and B.

For all intents and purposes, the policies are identical.

But what if John dies before he makes a serious illness claim?

Policy B will pay out €50,000 extra in life cover…all for a lower premium.

Yep, it doesn’t make sense. It sounds nutty, but you’re hardly surprised at this stage!

Structuring your policy this way takes advantage of a little-known discrepancy in insurers’ pricing of different types of serious illness cover.

Shhhh, don’t tell anyone.

Accelerated v Additional v Standalone v Independent Serious Illness Cover

Let’s recap:

Mortgage Protection + Accelerated Serious Illness Cover

= both reduce over time. A pay-out on Serious Illness will reduce the value of the Mortgage Protection cover.

Life Insurance + Accelerated Serious Illness

= neither reduce over time. A pay-out on Serious Illness will reduce the value of the Life Insurance cover.

Life Insurance + Additional Serious Illness

= neither reduce over time. A pay-out on Serious Illness doesn’t affect the Life Insurance cover

Independent/standalone Serious Illness

= no attached life cover, just Serious Illness. But be aware of the horribly unfair “Survival Period”

A life insurance survival period is the length of time you must live after being diagnosed with a critical illness. The insurance benefit payout will only be made if you live longer than the survival period.

The survival period is usually 14 days, so if you die within 13 days, you will not receive a payout.

Over to you…

Now you know the difference between the types of Serious Illness Cover.

Next, you need to determine how much serious illness cover you need and which company offers the most comprehensive coverage.

Complete the questionnaire below, and l will make a recommendation for you.

I’ll be right back after you complete the questionnaire , or you can schedule a callback here

Editor’s Note: This blog first appeared in 2019 and have been regularly updated since