Critical Illness Insurance

Unfortunately due to changing life styles, most of us are prone to critical illnesses. It is quite likely that all of us would have heard of someone in our close family or amongst friends who would have been diagnosed of cancer or had a heart attack. When such life threatening illness strikes, not only do people become physically frail but also lose their income generating potential. The last thing one would want is the financial burden that cannot be fulfilled. Critical Illness Insurance comes to the rescue as it pays a lump sum chosen by you as the benefit amount and you can not only pay off all your financial commitments but also use the benefit amount to make any modifications that may be needed to your property to adapt to your new life style.

There are essentially two types of critical illness covers you can choose from. The term critical illness insurance covers you for a fixed amount for the whole term of the insurance. This is also commonly referred to as level critical illness insurance. For example, if you choose to insure about £100,000 for 25 years. Regardless of when a claim is made year 1 or year 24, the benefit amount of £100,000 will be paid to you if the claim is allowed. This type of critical illness insurance is suitable for instance if you are on interest only mortgages. The other type of critical illness insurance is reducing type of cover. In this cover, the amount of benefit you would receive reduces year on year during the term of your policy. Taking the same example, the £100,000 that started in year 1 would gradually reduce and would come to zero in year 25. This type of reducing type critical illness cover is more suitable if you are on a re-payment mortgage wherein your financial liability reduces year on year.