If you are comparing critical illness cover for a mortgage, start with what you would need the money to do. Would you want to clear the loan, reduce the balance or keep cash available while someone in the family recovers? Those are different goals. A policy can pay a lump sum when a diagnosis meets its definition of a covered condition. The amount available depends on the cover you took out and the claim your insurer accepts.
What actually triggers a claim?
Look at the insurer’s definition alongside the name of the illness. Two policies can both list cancer, for example, but treat an early-stage diagnosis differently. Ask the adviser to show you the relevant wording, whether a smaller payment is available for some diagnoses and whether a survival period applies. Check any exclusions that apply to you personally, as well as the general policy terms. MoneyHelper’s guide to critical illness cover explains what to look for.
You might still be working when you receive a qualifying diagnosis. Equally, you could be too unwell to work for months without meeting a critical illness definition. If the problem you want to solve is a gap in your monthly earnings, read our guide to income protection.
How much of the mortgage would a payout cover?
Imagine a household owes £180,000 and has £60,000 of critical illness cover. If the insurer pays the full £60,000 and the family puts all of it towards the mortgage, about £120,000 of capital would remain, before any charges. Alternatively, they might keep some money for travel to appointments, childcare or household bills. Before making an overpayment, they would need to check their lender’s terms and ask how it would affect their payments.
Try the same exercise with your own figures. Write down the mortgage balance, your essential monthly spending, accessible savings and any sick pay. Which expense would become difficult first? That gives you a starting figure to discuss with an adviser and a way to assess whether the premium is affordable.
What if I already have life insurance?
Take your existing policy schedule to the conversation. Ask whether critical illness is covered separately or combined with life insurance. With some combined policies, a full critical illness payment ends the life cover too. Ask what would remain after a full claim and after a partial claim, and where the documents explain the difference. If other people depend on you, our family protection guide can help you think through their ongoing costs.
What should I bring to a protection review?
Bring your mortgage statement, existing policy schedules and details of any cover through work. Ask to see the conditions, exclusions, cover amount and term side by side. Greenacre’s advisers in Sunninghill, Ascot, can talk through these mortgage protection options with you. Speak to Greenacre about critical illness cover.