Critical Illness

 

Critical illness pays a lump sum on diagnosis of a serious illness as defined by the insurer. It can be used to protect a mortgage or as familty protection. It comes in two types:

 

Level: This means that the sum assured remains contant throughtout the term of the policy. Usually used to protect a family or an interest only mortgage. More expensive than decreasing cover

 

Decreasing: The sum assured decreases every year so in the later years of the policy it is worth less. Usually taken out to protect a repayment mortgage.

 

Term: This is the length of time you want the policy to run for. The maximum is 40 years or age 85.

 

Guaranteed or reviewable rates: This refers to the premium payable. If the rates are guaranteed the premium will remain the same throught the term of the policy. If they are reviewable then these are subject to review normally ever few years.