Critical Illness Cover
By taking out critical illness cover, your policy will pay out a tax-free lump sum if, during the term of your policy, you are diagnosed with one of a number of specified ‘critical’ illnesses or conditions.
Critical illness cover is usually available as an addition to all term assurance plans but can be bought on a stand-alone basis. Rather than waiting for death to occur, a critical illness policy will pay out a lump sum in the event a specified ‘critical’ illness’ or condition such as:
- Parkinson’s disease
- Multiple Sclerosis
- Heart attack or stroke
- Children’s critical illness
Many providers conform to the Association of British Insurers standards for qualifying illnesses, but the better ones enhance the definitions used to increase the conditions covered.
At Mortgage Advice Brokerage we will give you professional advice in a clear, concise way, and search the whole of the market to find the right product for you.
Once we have agreed on the best policy for your circumstances, we will liaise with the insurance company to ensure that your application is processed and accepted as quickly as possible.
Each policy differs, and the illnesses and conditions that you will be covered for will be determined at the outset and will be stipulated in the policy details. The lump sum will usually be paid if policyholders survive for a pre-determined period from the date they were first diagnosed.
The amount of critical illness cover you will need will depend on your circumstances and what you are comfortable with paying for the benefit received. We can provide examples and ideas of what amount of cover can be bought and at what cost.
There is no investment element to a critical illness policy.
Here is an overview of the different types of insurance available:
Level Term Assurance
Level Term Assurance pays a predetermined lump sum in the event of death during the duration of the policy. Set up for a specific amount at the outset that will remain the same throughout the duration of the policy – hence the name level.
Decreasing Term Assurance
Decreasing Term Assurance is similar to Level Term Assurance, but the benefit gradually decreases over the term of the policy. These policies are designed as cover for a repayment mortgage, or other loans where the amount of capital outstanding also decreases over time. Because the benefit reduces over time, the premiums are kept very low.
Family Income Benefit
Family Income Benefit is the hidden gem of insurance that not many people are aware of. As the name suggests they are most suitable for people who have children.
Instead of paying a lump sum upon death, it will pay a regular monthly tax-free income in the event of death to your dependents up until the end of the term of the policy. We would normally structure it to coincide with your youngest child reaching an age where they should be self-sufficient. Whilst having a mortgage repaid will improve things from a financial perspective, there will still be ongoing costs on a monthly basis with raising a family and running a home. That’s where this type of insurance can be most beneficial.