Life & Critical Illness Blog

It used to be the case that when you took out a mortgage the bank or building society would insist that you had life insurance in place.  Why not?  This is good advice for most people.  People know this because they often still think that life insurance is a legal requirement and it makes sense to them but what about critical illness insurance?

There is a big difference between premiums for life insurance and critical illness insurance and this is the main hurdle for people to understand.  Life insurance premiums keep on getting cheaper due advances in medical science.  We are living longer and the illnesses that used to be killers are now treatable in most cases so premature death is becoming less likely each year.  Critical illness, on the other hand, covers those illnesses that used to be killers so the premiums are going up all of the time.  Cancer Research say that we all have a 1 in 3 chance of being diagnosed with cancer at some stage in our lifetimes.  It’s perfectly natural for an insurance company to want to increase premiums with statistics like these because it means that they have a 1 in 3 chance of having to make a payout.

So critical illness costs a lot more than life insurance so why then should we have it along side our mortgages?  It goes back to statistics.  The illnesses covered by critical illness policies can be life threatening but but every year that probability goes down due to advances in medical science.  The death rate for cancer, for instance, has dropped by 20% over the last 15 years.  Death rates may be dropping but we are still being diagnosed and in some cases illnesses are more likely due to our current lifestyles.

Critical illness insurance takes care of you while you are still alive.  Being diagnosed with a critical illness usually means that you cannot work during treatment and chances are that you may not be able to return to work in the same capacity after treatment.  During this time you still have to pay your mortgage.  A mortgage is the biggest longest financial commitment people usually make so why risk losing your home because you have been diagnosed with a critical illness?

Statistically critical illness insurance makes far more sense for anyone with a mortgage than life insurance.  People just need to understand why and that it is worth paying for that peace of mind where their home is at stake.