Paid off mortgage with cancer in remission?

Codswallop

I heard a story recently about someone intheir thirties who had cancer in one place. The cancer was treated successfully and they told my friend that they'd completely paid off their mortgage with the compensation despite it being in remission with no more treatment. I'm ashamed to say that I know very little about life insurance but I really should be thinking about the future and the possibility of illness as it really could happen to anyone at any time. I would like to think that nobody left behind would have to worry.

In the event of an illness like, god forbid, cancer, how much would an insurance company pay out assuming let's say an average plan compared with a top whack one? Would this story be accurate?

jamesd

The story could easily be accurate. Critical illness insurance pays out on diagnosis of a specified list of conditions. Pure life assurance doesn't but it might be bundled with critical illness cover.

lisyloo

Life insurance pays out on death.
Critical illness pays out a lump sum if you get certain illnesses, this would be very nice if you have one of the illnesses on the list but it won't necessarily cover an income if you have an ongoing illness.
PHI (permanent health insurance) pays out an income until retirement if you can't work, which is quite different from the critical illness cover.

Ideally you'd have everything but that would be expensive, so you need to consider which eventualities are you trying to cover.
The guy in the situation mentioned was lucky because firstly it sounds like his claim qualified (criticial illness only covers certain things) and also he was not permanently affected.
A lot of people don't realise that if they are long term sick, then their employers sick pay will run out very quickly (6 months?) and then they are on very low state benefits.

So you need to consider what is more important to YOU.
Personally I think a lump sum is very nice but I find the long term sickness situation of more concern, but each person may have different concerns/priorities.

You could also see an IFA.
The best way is to get a recommendation from a friend, colleague, realtive, nieghbour etc.

Codswallop

Thank you very much for your replies, that was a great help. I'll be looking into it and comparing what is best for us.