There are different types of health insurance, including:
Critical illness cover
This pays out a single lump sum if you’re diagnosed with a life-threatening health condition such as a heart attack, a stroke, some types of cancer or kidney failure. It also pays out if you become totally and permanently disabled.
Income protection insurance
This pays out a monthly income if you can’t work because of illness or disability. Most policies pay out until you either recover or reach retirement age. Some pay out for a maximum term – for example, five years.
Mortgage payment protection insurance (MPPI)
This pays your monthly mortgage payments (and sometimes a bit extra) if you’re unable to work. Depending on the policy, this type of insurance may cover you because of illness, an accident, unemployment or all three. It usually only pays out for a maximum of 1–2 years. You usually need to keep on paying the premiums for your cover while you are ill.
Payment protection insurance (PPI)
This pays out a sum of money to help cover your monthly repayments on loans, credit/store cards or catalogue shopping payments.
Private medical insurance
This pays back the cost of private treatment for ‘acute’ medical conditions that start after your policy begins. An acute condition is one that’s likely to respond quickly to treatment or one that you’re likely to fully recover from.
Waiver of premium benefit
This is an option you may have with a life insurance policy or a pension plan. The waiver pays your insurance premiums or pension contributions if you can’t work because of illness or disability. Depending on the policy, this may continue until you return to work, the end of the insurance policy term, a set age or a set date.
With all these types of insurance, the likelihood of making a claim tends to increase if you already have a pre-existing medical condition. This could make it harder or more expensive to get cover if you don’t already have it.