January 2007

Q&A - Keith Gilchrist

Question: I have just taken out a new mortgage and have been offered Life Insurance to protect it, I have also been offered Critical Illness cover but this makes the monthly premium much more expensive, do I need it?

From MG Westhill.

 

Answer: Answer: Critical illness cover is not a "stand alone" policy; it is most commonly attached to life assurance policies. It is not an obligation to take out critical illness cover but it can be invaluable.

With life assurance policies, in most cases they will only pay out on death only, at the end of the term the policy ceases with no residual value.

With critical illness cover included, when the end of the term is reached, the policy still ceases with no residual value and the policy will also pay out on death but as well as this, the policy will pay out on diagnosis of a terminal illness or any of the specified critical illnesses.

These critical illnesses will vary from company to company so the key features should always be read carefully to establish what is covered and what is not. Typically, the following are covered: heart attack, cancer and kidney failure.

As there is more risk of a person suffering such an illness than dying, the premiums will be more expensive; however, for peace of mind, this may be invaluable to you. The main point of critical illness being to pay off major debt.

In order to see if critical illness cover is suitable for you, you should consult your financial planner.

Keith Gilchrist is a financial planner with Acumen Financial Planning. He can be contacted on 01224 573904.