Critical Illness Cover
This ensures that if you were
diagnosed with a specified critical illness such as some forms
of cancer, some forms of heart disease or a stroke, then your
mortgage would be repaid provided that you survived beyond
a certain period which can be up to 28 days.
Often the policy plan will include life
cover, so that even if you died the sum assured would still
be paid. Also, it can make it cheaper than taking out two
separate policies.
This type of cover means that you wouldn't
have to worry about paying your mortgage on top of everything
else you were going through. Many people who survive serious
illnesses are unable to work again but they still need a roof
over their head, the last thing you would want to do is to
have to sell your house because you can’t pay the mortgage.
The cover does vary between different
protection companies, as does the price, however, the cheapest
cover isn't always the best as some companies cover more illnesses
than others.
The cover can be arranged on a level
basis or a decreasing basis, as with the life cover. Level
cover means that the sum assured remains the same throughout
the term of the policy. For example, a plan for £100,000
over a 25 year term would pay out £100,000 if a claim
was made in year 1 or in year 25. Level cover is usually used
for family protection rather than covering a mortgage. But
there are some types of mortgages where this cover is suitable
for, one being interest only mortgages.
Decreasing cover is more commonly used to cover a repayment
mortgage, as it is designed so that the level of cover decreases
in line with the balance outstanding on the mortgage. It will
repay the mortgage balance at any time during the mortgage
term, provided that the mortgage payments have always been
met. However, this cover will never pay out more, than the
amount that is required to pay of the mortgage.
Waiver of premium or premium protection
is also an important option as this ensures that, for a small
increase in the monthly premium, if you were unable to work
due to accident or illness after a certain period, e.g. 6
months, the premiums would be covered. This means that you
are not in the position where you have to cancel valuable
cover when you may need it the most, because you can't afford
the premiums.
For the protection products mentioned
within this page we usually offer products from a selected
panel of providers.
Your home may be repossessed
if you do not keep up repayments on your mortgage.
Details
of our fees can be found here.
The FSA does not regulate Commercial
Mortgages or some forms of Buy to Let Mortgages.
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