Critical Illness Cover

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  • What is critical illness cover?
  • Why do you need it?
  • What type of cover, and what amount, should you get?

The reason why we think critical illness protection is so important is that this sits with our core value of working with our clients until they’re mortgage free.

In an ideal scenario that will simply mean we help you obtain the right mortgage and help manage that down over time until you’re mortgage free.

Unfortunately, life gets in the way and unexpected things do happen.

Therefore, we have a moral obligation to talk through at least what the risks are and then you can decide for yourself what’s best for you and your family.

What is critical illness cover?

Critical illness protection was created in 1983 by cardiac surgeon Dr Marius Barnard. He found that patients were surviving major illnesses but were badly affected by the long term physical and financial impacts. He worked with insurers to create what is now known as Critical Illness Cover.

  • Critical illness protection pays a lump sum of money to you, on diagnosis of a specified ‘critical illness’.
  • The Association of British Insurers (ABI) has identified 22 core conditions. The four main ones are: cancer, heart attack, stroke, and multiple sclerosis. Those four conditions alone account for around 80% to 85% of critical illness protection claims. Cancer accounts for about half of all claims on its own.
  • Insurers offer wildly varied cover which is exactly why you need specialist advice.
    • For example, Vitality cover 182 conditions, paid out proportionately from a policy known as ‘Serious Illness Cover’.
  • Different insurers vary in their breadth of mortgage critical illness cover but also in their claims history which is extremely important.

That’s why we will help you pick the best critical illness cover for you from the most relevant insurer for you based on your specific needs and objectives.

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Our key aims are to fully understand what you are looking to achieve, create a solution tailored to your needs, deliver results through an excellent service and build a relationship for life.

Why do you need mortgage critical illness cover?

  • The harsh statistic is that 1 in 2 people will get cancer before they die (as per Stand up to Cancer.)
  • Legal and General’s research Breadline to Deadline revealed that the average UK household has 24 days before running out of money after their income ceases.
  • This has huge financial implications specifically if you have a mortgage and why it’s so important to at least consider mortgage critical illness cover when looking to get a mortgage.
  • What do you WANT to happen? If this type of cover were free, would you take it?
  • This kind of lump sum would give you options. Money gives you the freedom to choose the best medical care, time to recover, etc.

What type of critical illness protection do you need, and how much?

  • Ideally the best critical illness cover for you should match the mortgage in amount and structure.
    • Level Term Insurance is typically linked with an interest only mortgage with cover for a set of time.
      • This is appropriate for interest only mortgages or for families for a certain period.
    • Decreasing Term Assured is typically linked to a repayment mortgage and decreases on the same sort of curve as a repayment mortgage.
    • For a part and part mortgage you can opt for a mix of both types of critical illness cover.
  • Some clients are unable to afford this type of cover so opt for mortgage critical illness cover linked to their income. For example, you may wish to opt for either 1, 2 or 3 x annual salary, paid tax free, depending on how much you earn and how much disposable income you have.
  • It’s often better to have some mortgage critical illness cover than none, particularly as most insurers offer many other benefits with this type of cover such as rehab, access to nurses, better diagnoses, and even worldwide cover to send you to the best place in the world for medical treatment.

Therefore, it’s just so important for us to at least have this conversation with you about the best critical illness cover for you.

You make the decision, our job is simply as an adviser to offer you the pros and cons, the costs, and the risks and then you can make an informed decision about what’s best to do for you and your family.

If you would like to talk about critical illness protection in more detail, please get in contact with one of the team, we would love to help you with personalised advice.