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Life cover with a critical illness option

This is where a life assurance policy, which pays on death or after a fixed period, offers the option to add a Critical illness policy.


There are hundreds of life policy providers. Many of these are tied to a mortgage or only available from a bank where you have an account. Selecting a Life Policy because of the option it offers on Critical Illness, is as nonsensical as buying a car just because you like the radio or sat-nav system.


Where critical illness is part of or an option to add to a life policy, it is important to understand the two main types of cover


Fixed term life cover

You pay a fixed, regular amount into a policy that lasts for a period of time decided by you. It pays out a pre-agreed tax-free lump sum if you die (or are diagnosed with a terminal illness)


Mortgage life cover

In return for regular payments, you get a policy that is designed to pay out enough to cover the outstanding balance on the repayment mortgage sum in the event you die (or are diagnosed with a terminal illness). The amount to be paid out reduces in size as you pay back your mortgage



Types of cover: Index