Should Critical Illness insurance be combined with Life Insurance?

It is possible to combine critical illness cover with a life insurance policy. So, the question is - are two policies better than one?

There can be Savings
It can be that combining critical illness cover and life cover into one policy will be the cheapest option. The primary reason for this is that the insurance company can apply various internal company tax allowances to its pricing of life policies which are not available for separate critical illness policies. However, when they sell a combined policy, the allowances can be applied across the entire policy.

ClickLife can provide both combined and separate quotations so test them out – get a quote for each. You can then compare the prices and see whether there is a saving to be had in combining them.

Low cost policies for Mortgage cover
A combined policy will almost certainly be the cheapest option if you want insurance to repay a Repayment Mortgage in the event that you were to die or be diagnosed with a critical illness. This is because with a Repayment Mortgage, the outstanding money owed to your mortgage provider steadily decreases as part of your monthly payments repays the capital you borrowed. Therefore, your cheapest option will be to buy Mortgage Life Insurance combined with Critical Illness cover where the sum insured similarly decreases in line with your mortgage.

The idea is that with reducing cover you always have just sufficient amount of cover to pay off your mortgage if the worst happened. So in the latter years, when your mortgage is almost paid off, very little insurance cover is required. This enables the insurance company to offer you an especially low premium.

I have an interest Only Mortgage. What should I buy?
As the outstanding sum you owe your mortgage provider remains constant, you need normal life insurance and normal critical illness cover. You should not buy insurance with reducing cover.

So our suggestion stands; the cheapest option is likely to be the combination of both types of insurance on one policy. Our advice to you is get both combined and separate quotations from ClickLife and then you can see whether there is a saving to be made.

How will a claim be paid?
If you have a valid claim, a normal Critical Illness policy will pay you a tax-free lump sum. Then, as soon as the payment is made the policy will end.

For a claim to be valid, you will have been diagnosedby a qualified doctor as having a critical illness or condition which is specifically listed as an insured illness in your insurer’s Key Features Booklet.

All insurance companies require you to have survived for a specific number of days following your diagnosis in order to make a claim. This is normally 28 days although some insurance companies have brought it down to 14 days.