Finance Talk

I have a policy to insure my mortgage if i died. My broker now seems to think i also need critical illness cover to go alongside it. But it seems a lot of money. what should i do?

Your insurance adviser presumeably knows your circumstances well and my comments are made without knowing you. But i can give some pointers.

If you have critical illness insurance, then if you are diagnosed with one of the many illnesses these polices typically cover (including the big 3 - heart attack, stroke and cancer), the policy will provide the funds to repay your mortgage straight away. Bearing in mind that many people survive for years and years following these sorts of illness whilst being unable to work properly, you can appreciate why your insurance adviser may think it is a good idea. One in 5 men and 1 in 6 women, suffer a critical illness before their normal retirement age. Critical Illness insurance is expensive precisely because the risks are so high!

If you have a repayment mortgage, you can economise by buying a "decreasing cover" critical illness policy. The amount you owe on your mortgage reduces each year as you steadily repay it back to your mortgage lender. So to repay your mortgage, you need less and less as the years go by. That's what a "decreasing cover" critical illness policy does - the amount of cover automatically decreases each year in line with the amount you owe to your mortgage lender.

And remember, all these types of insurance are a lot cheaper on the internet. Get a quote from this site - I'll be staggered if the price isn't a lot cheaper than your insurance adviser has offered!