Critical illness cover is a well established means of protecting against the risk of home loan default due to serious illness, such as cancer, heart attack and stroke. Mortgage critical illness insurance would pay a tax-free lump sum should the policyholder suffer a medical condition specified in the policy document. These funds can therefore be used to repay a home loan in full. It is very common to take out life insurance and critical illness cover as a combined policy to protect against both death and suffering a serious illness.
A solid policy choice
Most reputable policies cover around 35 critical illnesses and the UK’s leading insurers in this area usually have a payout ratio in excess of 90 per cent of claims made, even including rejected claims for non-disclosure at the application stage. Despite this, insurers are always looking to make their policies even better, with both Fortis and Legal & General recently announcing improvements to their offering.
The changes made
Fortis Life have recently made it even easier to claim on their critical illness insurance by relaxing their definition requirements for coma, heart valve replacement, paralysis of limbs and third degree burns. They have also added multiple system atrophy to complement their existing cover for degenerative neurological disorders. Fortis now also offer the services of Best Doctors to their critical illness clients, where clients who are suffering a serious illness can get a second opinion from a specialist consultant. Fortis now boasts to cover 40 critical illness conditions.
Legal & General have also made improvements to the cover they provide and have now been awarded a 5 Star Defaqto rating. They have added four new illnesses and improved their definitions, meaning their new plan now has 11 ABI+ definitions. Legal & General have also enhanced their policies with features such as children’s cover, guaranteed insurability options, waiver of premium and indexation.