Critical Illness
Critical Illness Insurance, also known as
Critical
Illness Cover, is designed to pay a tax free lump sum in the event that
you are diagnosed with a defined Critical Illness.
The diagnosis of a Critical Illness can be life changing in all respects, least
of all financially. When you are first diagnosed with a Critical Illness the
last thing you need to be worrying about is your finances, but what would happen
to your mortgage and bill payments?
With a payout from your Critical Illness Cover you could pay off your mortgage,
removing the major liability, or choose to put some of your payout towards
specialist private care. Whatever you choose to use the pay out for, it will be
a weight off your mind when you need some relief most of all.
Like Life Insurance, Critical Illness comes in two main flavours:
- Level Term Critical Illness Insurance: With a level cover the amount you
choose to protect is guaranteed to remain the same throughout the policy. It
won't reduce over time and if you need to claim on the policy, it will pay out
the full level of cover. This type of cover is often used to protect interest
only mortgages or loans, or for family protection.
- Decreasing Critical Illness Insurance/Mortgage Critical Illness Insurance:
With decreasing or mortgage critical illness insurance, the amount of cover you
choose will decrease over time throughout the full term of the policy. This is
most suited to Capital and Repayment mortgages, this is not suitable for
interest only mortgages.
It is important to note that Critical Illness Cover is not the same as terminal
illness. Terminal illness is an option included with all Life Insurance packages
and allows the policy holder to make a claim if they are diagnosed with an
illness from which they will die within the next 12 months. Unfortunately a
number of unscrumpulous organisations are trying to sell terminal illness as
critical illness and two are simply not the same thing!
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