You Can Take Critical Illness Insurance For Your Mortgage

September 2nd, 2010

You can take a critical illness insurance plan to protect your mortgage if you wish to do so. Some of us have an interest only mortgage that needs to be protected with a level based plan. This would mean that the amount you have on your mortgage remains level over the term you have specified and does not reduce. You will have to have some form of repayment vehicle for this form of mortgage as when its term is complete you will still have an outstanding amount of money on it.

The alternative to this form of mortgage is a capital and repayment one. This means that the sum assured of the mortgage will decrease over the term and reduce over the years you pay the mortgage off. A capital and repayment mortgage is often one that is very popular in the UK. It can be more expensive than the interest only mortgage however you are always going to be in a position where you pay off your mortgage by the end of it.

Regardless of the type of plan you take out critical illness insurance can provide excellent cover for it and it can be tailored to suit your needs and situation. This type of cover will cover you if you were to suffer from one of the designated critical illnesses within the plan you take within the policy term you have. It will pay out a lump sum that is tax free and once you have claimed on the plan it will cease at this stage.

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Are my children covered on my critical illness plan ?

December 9th, 2008

The answer is yes, on the majority of critical illness plans offered childrens cover is offered. A cash lump is normally offered and this can be equal to 50% of the full sum assured, upto a maximum of £25,000 in normal circumstances.

Many of these plans include children that are legally adopted or step children. They must be between the ages of 30 days to 18 normally. The majority of the plans will pay out once per child and for a maximum of two children.

The policy will not affect the main critical illness plan you took out and this will pay out as normal should a claim be made on it.

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How will I know if the Life Insurance Policy is the right one for me?

November 20th, 2008

Whether a life insurance policy is the right one for you, i.e. is suitable, is dependent on a number of factors.  

The term suitability basically means that a certain product, in this case the life insurance, is appropriate for a certain individual.  So a life insurance policy that is right for you may not be suitable life insurance cover for someone else.

When considering taking out a life insurance policy you need to take into account a number of different factors. 

The first and most important one is your liabilities.  Ideally in the event of your death you would want to have enough life insurance to cover debts such as your mortgage, any loans and credit cards etc.  This way you will not be leaving any outstanding monies owed that your next of kin may become liable to have to pay.

Secondly, you may want to take into account any dependents or next of kin that you may be leaving behind in the event of your death.  You may wish to ensure that an appropriate lump sum of money, after your liabilities are paid off, is left so that your dependents and or next of kin can live comfortably.

So, the amount of life insurance cover you may wish to take out would be made up of your liabilities and an amount to provide a comfortable income for anyone left behind in the event of your death.  The life insurance policy is payable as a tax free lump sum in the event of your death.  Also, in most cases the life insurance cover will pay out on the diagnosis of a terminal illness. 

If the life insurance was to pay out the benefit due to a terminal illness the diagnosis must be provided by either a general practitioner or practicing consultant.  The life expectancy of the insured must be no longer than twelve months.  At this stage the life insurance policy would pay out early thus enabling the insured to make the necessary financial arrangements.  However, in most cases the life insurance cover would not pay out early, on the diagnosis of a terminal illness, if the term of the policy only had twelve months left before expiring.  In some cases, with some insurers, this period is eighteen months prior to the life insurance policy expiring.  In these situations the life insurance company would then only pay out the life insurance policy upon death of the insured.  

The ideal suitable life insurance policy for you will only be right if you can afford the monthly premiums.  The monthly premium is dependent upon the cover amount, the term of the policy, your age, sex, whether you smoke, your lifestyle, health and family health.  If you are unable to keep up the monthly payments to the insurance company the life insurance policy will lapse and you will no longer be covered.  Therefore, you may not be able to have your ideal suitable life insurance policy.  You may have to prioritise and possibly only cover your liabilities if that made the premiums affordable.  This policy would then be the right one for you.

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My policy says i must have an insurable interest on my life insurance plan what is it ?

November 14th, 2008

Insuranble interest is a very interesting area. It is defined as someone who is buying the policy wether it be life insurance or critical illness insurance has more to lose than to gain by insuring there death. The insurable interest part of the insurance regulations has been implemented to prevent an individual purchasing a policy on another person unknowlingly on another person for purposes of wagering or planned murder or something like this.

You can have as much insurable interest on yourself as you want. This means that you can get as much life insurance as you want on yourself. Obviously this is down to how much the insurance broker is willing to give also.

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I have got a mortgage do I need life insurance ?

November 10th, 2008

Yes, life insurance is a form of protection insurance and these as there name suggests they are there to protect you against the worse happening.

After all should you die your liaiblities ie your mortgage or loans will be passed as a liability to your next of kin. If you are married then your mortgage could go to your husband or wife and it is there entire liaiblity to pay. If you are the bread winner in the family then this is even more important as there will be in some cases no way of repaying the debt for the remaining partner.

Life insurance will be a good way of paying these debts off, you can get a life insurance plan that will pay off your mortgage specifically and it will decrease along side your mortgage. This is called mortgage insurance or decreasing insurance and it is designed to reduce its sum assured year by year alongside a decreasing mortgage.  I have a level mortgage or interest only mortgage i hear you say, well level or term life insurance is the one for you to take out. This means your life insurance sum assured will remain constant throughout the term.

Overall it is important to protect any liabilities that you may have as you would not want them to be passed on to your relatives left behind.

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I am thinking about applying for critical illness insurance what is the process ?

November 10th, 2008

Crticial illness insurance is something that has changed with the advent of the internet. Previously prior to the internet you would visit your local financial advisor or your local bank and see what they had on offer. They were often tied to one particular company and you had little or no choice over the policy that you recieved. The pricing of this was also normally fixed so there was no opportunities to obtain a good deal.

Nowadays however things are very different, with a few clicks of the mouse you can obtain a critical illness quotation from a range of different providers. Each one of which have very different contracts and will cover you for a wide range of critical illnesses. Obviously with this choice in the market we now have this brings competition between providers and brokers so this drives the price down for you and the contract you are buying.

Once you have looked through the different quotes you can decide what contract you want to take, and many of the online brokers will allow you to complete the application for the insurance online. If not they will normally send it out in the post or they will complete it over the telephone with you. Once the application and normally direct debit is completed it will be sent for underwriting with the specific company that you decide to go with. The underwriting process can be straight forward or can sometimes be quite complex. This is all dependent on your medical history normally. The company could decide to go get your medical records or they could ask for a short medical exam. They also will just accept the case based on the information given in the application form.

Once the case is accepted the insurance broker will come back and arrange an appropriate start date. This can then be started at your convenience.

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Do I really need Life Insurance ?

November 7th, 2008

Life insurance is one of those things that many of us don’t have but really should have some cover. With it not being a legal requirement such as car insurance or as highly claimed on as contents insurance many of us do not bother with it.

Life insurance is relatively inexpensive and it can make a huge difference to those effected by it, just take a step back now and have a think, if the worse was to happen to you right now how would those left behind cope with the situation. Remember if you have a joint liability then the full debt is passed onto the surviving partner not just their half. If you were the bread winner then they potentially would be left with the debt and not really having any method of paying for it. If your family is used to a certain standard of living and if you were to die this would potentially stop so life insurance could help this situation by paying an income to them.

Life insurance can be designed to fit in with your situation and for a relatively small ammount it can cover you for most situations. So dont delay go get your life insurance today.

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Critical Illness Insurance

November 6th, 2008

Well you are thinking about critical illness insurance, there are so many things to think about and to understand and this is on top of deciding what contract to go for and with which provider.

Well first things first do your research ! Gather as much information as you can about critical illness insurance first, read about the illnesses that are covered and understand what will consitute a pay out and what will not.

There are literally hundreds of plans available, all with different quirks and different parts to them. What you need to understand is that the majority of claims are for heart attack, cancer and stroke and because of recent change in legislation within the UK the ABI have made these compulsary inclusions in all plans. 

Critical illness plans have anyhwere between 25 to 40 critical illnesses covered within them and it is important that you understand what is covered in the particular contract you have decided to take. Ask for the policy summary and many providers can give you a provider coverage chart, these are fantastic at showing you exactly what is covered in each individual contract and you can see right in front of you who covers what and the comparisons of both.

An interesting part of the majority of critical illness contracts is childrens cover, this means that if you have a child that is naturally yours or legally adopted they too are covered under your plan. They will not normally recieve a full payment it is normally worked out as an average of the cover normally upto about £20,000. The children are covered for all of the illnesses in the contract and you can have upto a maximum of 2 claims throughout the lifetime of the policy.

In conclusion get your research done and understand your options first.

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