It is not compulsory to have critical illness insurance in place to get a mortgage, but it is highly advisable. Here is further information on the policies to consider. As with all insurance policies, conditions and exclusions will apply.
Critical illness cover is there so that if you were diagnosed with a serious illness, such as cancer, a heart attack or a stroke, money would not be another worry while you get better. Being told you have a serious illness is hard enough without wondering how you will pay the mortgage, the council tax and the bills that keep coming. Critical illness cover pays a tax free lump sum if you are diagnosed with one of the conditions listed in your policy.
This could be used to clear the mortgage in full or in part, to cover monthly expenses, or towards treatment and healthcare if required. These plans have no cash value at any time and will cease at the end of the term. If premiums are not maintained, then cover will lapse.
Critical illness cover pays out a tax-free lump sum if you are diagnosed with one of the serious conditions listed in your policy. Common covered conditions include cancer, heart attack, stroke and multiple sclerosis. The payout can be used however you choose, whether that is to pay off your mortgage, fund private medical treatment, adapt your home or simply replace lost income while you focus on your recovery.
Statistics show that around one in two people in the UK will be diagnosed with cancer at some point in their lifetime. A serious illness diagnosis can have a significant impact on your ability to work and your overall financial position. Critical illness cover can ease that financial pressure at an already extremely difficult time, allowing you to concentrate on getting well without worrying about money.
We compare critical illness cover from a wide panel of insurers across the whole of the market. We advise on the right level of cover and whether a standalone or combined life and critical illness policy suits you best. You do not pay us a fee for protection advice, and we help clients in Romsey, Southampton and across the UK.
Related protection advice:
Critical illness cover is often combined with life insurance for comprehensive financial protection. Find out more about life insurance, income protection insurance and buildings and contents insurance, or visit our main mortgage protection insurance page.
It is not compulsory to have critical illness insurance in place to get a mortgage, but it is highly advisable. Here is further information on the policies to consider. As with all insurance policies, conditions and exclusions will apply.
Policy Term
The term of the policy is specified at the outset of the policy starting. In simple terms, it means how long you are protecting yourself, for example 1 to 50 years. Often the term is decided by the following points:
Mortgage term: If your sole purpose is to protect the mortgage then usually the critical illness cover will coincide with your mortgage term. So, however many years you decide to do the mortgage over, the critical illness cover will coincide with this.
Dependents: Taking the policy to an age whereby the children are financially independent. For example, 18 once they have finished school or 23 after university. This ensures that if anything happened to you whilst the children are still relying on you, your family's lifestyle would not need to change during this difficult time.
Retirement age: Make sure that your financial commitments are covered should the worst happen by taking the policy to retirement age, when your income would otherwise be your pension.
Budget: The amount of cover you take out will impact the monthly premium. We will help you find the right level of cover to suit both your needs and your budget, comparing policies from across the whole of the market.
Deciding which critical illness cover type is suitable for you and your family can seem challenging, however we are here to help and guide you into making the right decision. Whether you simply want to protect the mortgage, help to maintain the same standard of living, or simply cover ongoing costs there are 3 options for you to choose from:
The amount reduces in line with a repayment mortgage. It is the cheapest way to make sure the mortgage could be cleared if you were seriously ill.
The amount stays the same for the whole term. It suits an interest only mortgage or anyone who wants a lump sum for treatment, home changes or time off work.
Life and critical illness cover in one policy pays out once, on diagnosis or death, whichever comes first. It is usually cheaper than two separate policies, but once it has paid out the cover ends.
Good to know: Critical illness cover can be taken as a stand-alone policy or as a bolt-on to a life assurance plan. Taking both together can often be cost effective and means you are protected against both death and serious illness. Speak to our advisers to find the right combination for you.
Terminal Illness benefit: Included within the policies is terminal illness benefit. In the awful event that you are given less than 12 months to live you will receive the pay-out whilst you are still alive. This can be used to help you and your family during this extremely difficult time so that you have no financial worries or stress.
Accidental death cover: many insurers give you free accidental death cover while they assess your application, so you have some protection from day one.
Children's critical illness cover: most policies include cover for your children at no extra cost. If your child is diagnosed with a covered condition, the insurer pays a lump sum, usually a percentage of your own cover up to a limit, which you can use however you need, from treatment and care to time off work together.
Fracture cover: Fracture cover pays you a lump sum if you suffer one of the specified fractures during any 12-month period. Most insurance companies will pay one successful claim each policy year.
Critical illness cover pays a tax free lump sum if you are diagnosed with one of the conditions listed in your policy. These are the points we check with clients before recommending one.
Every policy covers cancer, heart attack and stroke, which make up most claims. Better policies cover more conditions and use wider definitions, so the number of conditions matters less than how each one is defined.
Many policies now make smaller payments for less severe conditions, such as some early stage cancers, and then carry on covering you for the main conditions.
Most policies only pay if you survive for a short time after diagnosis, usually 10 to 14 days. If you die within that time, a combined life policy would pay instead.
Most policies include cover for your children at no extra cost, usually a percentage of your own cover up to a fixed limit, if they are diagnosed with a covered condition.
Many people choose enough to clear the mortgage. Others add a year or two of income so they can take time off to recover without money worries. We work out a figure that matches your budget.
Critical illness cover costs more than life insurance because claims are more likely. Your age, health, smoking status and the amount of cover make the biggest difference to the premium.
Read the essential information
Our critical illness essential information guide covers definitions, claims and what can stop a policy paying out. If you are also thinking about income, see our income protection cover page .
You do not pay us a fee for protection advice. If you decide to take out a policy, the insurer pays us commission. We compare policies from across the whole of the market and explain what each one does and does not cover before you decide.
