Can I get decreasing term critical illness cover?

I want to take out critical illness insurance to cover my mortgage but is there decreasing term critical illness protection? I have a repayment mortgage so I need the cover to come down over time.
Question asked by Milly Sparks
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Answered by Andrew Jenkinson

Yes, it is possible to take out critical illness cover on a decreasing term basis. With this type of insurance your mortgage loan could be repaid if you were to suffer a serious illness or injury within the policy term. Reputable plans cover around 35 specific medical conditions.

How does critical illness cover work?

With a decreasing term plan the level of cover would decline over time so that the amount insured should be just sufficient enough to repay the mortgage due to suffering a critical illness condition at any point during the policy term. Decreasing term cover is usually used to protect a principal repayment loan.

It is important to note that most decreasing term plans do not guarantee to repay the loan in full but rather the level cover declines based upon an assumed policy interest rate, usually of between 8 to 10 per cent. This means that the plan would contain enough cover to repay the loan at all times provided that your mortgage interest rate does not go above 8 to 10 per cent (depending on the insurer).\

Gaining cost effective cover

The most cost effective method of gaining cover is usually to take out mortgage life cover with critical illness insurance. In other words, it is usually cheaper to take out decreasing term insurance and add critical illness cover to the plan as an option.

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This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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