CRITICAL ILLNESS INSURANCE FOR MORTGAGE COVER

What is critical illness insurance for mortgages?

Critical Illness Insurance for Mortgages is a special kind of insurance designed to help cover your mortgage payments if you get diagnosed with a serious health condition, like certain cancers, heart attacks, or strokes.

If you become critically ill, this insurance pays out a lump sum that you can use to pay your mortgage, ensuring that your home is secure even when your health might prevent you from working and earning your regular income.

This type of insurance is especially helpful for protecting your home and providing financial peace of mind during challenging health situations.

How critical illness insurance protects your mortgage

Critical Illness Insurance protects your mortgage by providing financial support in the event you’re diagnosed with a serious illness covered by the policy.

Here’s how it works:

• Payout on Diagnosis: If you’re diagnosed with one of the critical illnesses listed in your policy, the insurance pays out a tax-free lump sum.
• Mortgage Payments: This lump sum can be used to cover your mortgage payments. This is especially important if your illness affects your ability to work and earn an income.
• Financial Security: By ensuring that your mortgage payments can be made, this insurance helps maintain your living situation and prevents the risk of losing your home due to financial strain from unexpected health issues.
• Peace of Mind: Knowing your mortgage is covered in the event of a critical illness can provide significant peace of mind, allowing you to focus on your health and recovery without the added stress of financial worries.

Choosing the right coverage for your mortgage

When picking the right Critical Illness Insurance for your mortgage, here are some things to think about:

Understanding your mortgage and coverage needs

Choose insurance that matches what you still owe on your home. This ensures it can fully cover your mortgage if you fall ill. The insurance should last as long as you have mortgage payments to make. If you already have a good amount of savings or other income sources, you might not need as much insurance coverage.

Think about your personal and policy factors

Pick a monthly payment that fits your budget. More comprehensive coverage typically costs more. If your family’s health history or your own health puts you at a higher risk for critical illnesses, consider getting more extensive insurance.

Ensure the policy covers a variety of illnesses, especially ones you might be more likely to face. Also, if there are changes in your life, like a decrease in your mortgage amount, you might want a policy that can adjust accordingly.

Critical illness insurance vs mortgage protection insurance

Critical Illness Insurance and Mortgage Protection Insurance are both important, but they’re different.

Critical illness insurance

• Pays a lump sum if you’re diagnosed with a serious illness covered by the policy.
• The money can be used for anything: paying bills, everyday expenses, or your mortgage.

Mortgage protection insurance

• Specifically designed to pay off your mortgage if you pass away or are too ill to work.
• Ensures your mortgage is covered, relieving your family from worrying about house payments under difficult circumstances.

So, the main difference is what they cover. Critical Illness Insurance helps with many expenses during serious illness, while Mortgage Protection Insurance is focused just on your mortgage if you pass away or can’t work.

How much cover do I need for critical illness cover for mortgages?

When figuring out how much critical illness cover you need for your mortgage, consider the following points:

1. Mortgage Balance: The amount of coverage should at least match your remaining mortgage balance. This ensures that if you get critically ill, the insurance can cover your entire mortgage.
2. Other Financial Responsibilities: Think about other expenses you might have, like bills, childcare, or living costs. You might want enough cover to help with these too, not just the mortgage.
3. Your Budget: Look at what you can afford to pay in premiums. More coverage usually means higher premiums.
4. Income Replacement: If your salary is key to paying your mortgage, consider how much income you’d need to replace if you couldn’t work.
5. Health Factors: Your health condition and family medical history might affect your need for coverage. If you’re at higher risk for certain illnesses, you may want more coverage.

How to apply for mortgage critical illness insurance

Start by finding out the potential costs either online or through an insurance agent.

Filling out the application

Provide personal details like age, job, health status, and whether you smoke.

Answering health-related questions

Be prepared to share information about your health and medical history, which helps the insurer assess your application.

Deciding on your coverage amount

Choose an amount that sufficiently covers your mortgage and meets your financial needs.

Selecting policy details

Decide on the length of your policy and whether you want level or decreasing coverage.

Reviewing and submitting your application

Make sure all the information is correct before submitting your application.

Undergoing the underwriting process

The insurance company will review your application, possibly requesting additional information or medical tests.

Receiving policy approval

Once reviewed, the insurer will inform you if your application is approved and provide the details of your premiums.

These steps will guide you through the process of applying for Mortgage Critical Illness Insurance, ensuring you get the right coverage for your needs.

What is the cost of critical illness insurance for mortgage payments?

The cost of Critical Illness Insurance for mortgage payments varies based on several factors:

1. Amount of Cover: The more coverage you need (to match your mortgage amount), the higher the premium.
2. Policy Term: Longer policies generally cost more.
3. Type of Policy: Level cover tends to be more expensive than decreasing cover because the payout amount doesn’t reduce over time.
4. Your Age: Premiums usually increase as you get older.
5. Health and Lifestyle: Your overall health, whether you smoke, and your family medical history can impact the cost.
6. Job Risks: If your job is considered high-risk, this might also affect the premium.

Remember, each person’s situation is different, so premiums can vary widely. Getting a personalised quote will give you the most accurate idea of what you’ll pay for your specific circumstances.

What’s covered in mortgage critical illness policies?

Mortgage Critical Illness Policies typically cover a range of serious health conditions and events, which can vary between policies.

Commonly included are certain types of cancer, heart attacks, and strokes. However, the specific illnesses covered can be broader, extending to conditions like multiple sclerosis, kidney failure, or paralysis.

The key is that these illnesses are severe enough to impact your ability to work and pay your mortgage.

Some policies also cover surgeries such as organ transplants or bypasses. It’s important to read the policy details carefully, as each insurer may have different definitions and exclusions for what illnesses and conditions are covered under their critical illness policies.