Critical Illness Policy & Debt

debt4evernot

We signed up with CCCS to help with our debt problems. However, a couple of years ago we stupidly re-mortgaged but kept our pre-existing critical illness cover; the new critical illness policy we were offered was far too expensive. One of the reasons we did this is that if I am off work for any sickness - from one day to a month - I do not get paid. However we pay £36.29 a month - obviously the critical illness is reducing as it was based on our other mortgage and at the end of the term, if we haven't usesd it, we get nothing back - a non-return policy.

Was wondering if we would be better cancelling this - my main concern is that should anything serious happen to me we would have no money to assist.

Hope all this makes sense.

Xbigman

Is that critical illness cover that only pays your mortgage? If it is and you have not updated it for your new mortgage details it won't pay out anyway.
Please double check it is valid.

If this is general critical illness cover why is it reducing?

I am generally against this type of cover because it rarely pays out when you need it. So my advice, cancel it.
Regards



X

Northernbird_2

Can I just ask, are you referring to Critical Illness or Income Replacement insurance? Critical Illness pays you a cash lump sum if you are diagnosed with a specific critical illness, whereas Income Replacement would pay you a regular monthly income if you were unable to work due to Accident or Sickness (any sickness). In addition, it depends on what cover you have selected, so for Income Replacement it can pay out from Day One, or pays out from say Week 9.

I only ask, because you say you need the cover because work wouldn't pay you from Day One which sounds more like an Income Replacement requirement. Presumably, you wouldn't need it just for your mortgage, but other bills as well?

With Critical Illness, it would pay out the cash lump sum on diagnosis, not necessarily when you were unable to work (which may happen first).

I don't know if this helps, but it may be worth taking a look at what cover you have, and if it's still suitable.

hobo28

I have something similar. I did shop around and currently costs me £16 a month. It does reduce as the mortgage does too.

I know chances are low that it will pay out and to be honest I don't WANT it to pay out because that means something BAD has happened. But I do feel its important because I need to know my mortgage would be wiped out and I would not lose my house. Having kids, that is especially important.

That said, I can't see how a reducing critial illness cover would help if you are off sick for one day to a month. It will only pay out for certain things such as a heart attack or terminal cancer etc.

If thats your main concern, I'd take the £32 a month and stick it into a seperate account such as an ISA which you can then use to safeguard against those days where you are ill.

mountainofdebt

that Critical illness cover covered you for the really nasty conditions...cancer, heart attack etc ....but you didn't have to actually be dying from the conditions to claim?

Northernbird_2

You don't have to be dying from the conditions. All CI policies cover Cancer, Heart Attack and Stroke, and then the rest depend on the policy. The definitions for the conditions are specific. For example for Cancer, it generally has to be invasive. So if you had a mole frozen off that turned out to be malignant, the cancer would have to have spread to the surrounding tissue to be able to claim.

I'd just look at the cover you have to ensure its sufficent. The only danger in switching is that the definitions of the conditions may be tighter now, and the pre-existing condition exclusion would start again, and there may be some kind of moratorium period.