Also, if the policy is level (fixed), the regular payments may not be able to keep up with inflation, should it soar back to the levels such as those seen in late 2022 to early 2023.
It also generally only pays out on death or on the diagnosis of a terminal illness, which means if the main breadwinner is ill enough to have to stop work, Fib will not pay out.
In this case, advisers advocate considering other products that might be more appropriate for families, which come with additional benefits and support, if the parent or child is diagnosed with a critical illness.
For example, Loydon points to the use of critical illness cover, which often comes with cover for children or allows the policyholder to add children onto the cover.
This can be an extremely useful helpline for families when children need to be hospitalised with a serious illness and parents need to take time off to spend with the child.
Reassured has provided some key advantages and disadvantages in the info box, below:
Many providers now have added benefits to critical illness cover policies, whereby if a client has to stop working because of a serious illness, and the provider pays out on the claim, the client could receive up to £1,000 or more towards childcare costs while they recover.
Some providers attach children's critical illness cover to income protection policies. For example, British Friendly launched its children's critical illness cover in June 2024 as an optional benefit for clients taking out income protection.
Natalie Summerson, British Friendly's sales and marketing director, explains: “The principal purpose for children’s critical illness cover is to support the family financially should they need to stop working/reduce their hours to care for the child."
The payments could be used to support school fees, should the parent find themselves with a reduced income due to caring for their seriously ill child, or to cover the cost of hotel stays near to the hospital or travelling expenses.
However, not all conditions are covered by critical illness cover; it is worth checking with each insurer's policies as medical advances are changing all the time, meaning that conditions that may have once been considered terminal are now treatable.
How to go about recommending Fib
There are companies such as providers and specialist insurance brokers, like Reassured, who provide useful calculators on their website to help advisers and individuals gauge how much cover a family might need.
Many of these companies also have in-depth guides and fact boxes that can help provide information to families considering whether to do Fib or critical illness cover or other forms of insurance.
