Life Insurance/Critical Illness Cover

InhaleMood

I have a call with Cavendish on Thursday about life insurance/critical illness cover, but I was wondering if I might be able to get some advice beforehand so that I feel more prepared. 
2 of us, own the property as joint tenants, not married. I am 40, he is 49, both healthy.
I'm thinking about life insurance to pay off mortgage
- If I die, my partner would sell the house and move out of the country. 
- If he dies, I would just about be able to cover the monthly outgoings. 
*Do we need it? 
*What happens if we pay off the mortgage early? 

I think critical illness might be more important for me. 
- If I can't work, my partner couldn't cover all of the outgoings and our savings would dwindle down within a couple of years. 
- If he can't work, again, I would just about be able to cover outgoings but it would be a struggle. 
*Is this what critical illness cover would help with? 

Thank you in advance and please let me know if I have missed out any relevant info.

Aretnap

Be aware that critical illness doesn't pay out because you "can't work". It pays out of you get one of a pre-defined set of conditions of a pre-defined severity, regardless of the effect on your ability to work. The conditions covered vary from policy to policy, but it tends to cover "dramatic" conditions like cancer, heart attacks or MS, rather than "mundane" ones like musculoskeletal problems or mental health issues.

So you could have a heart attack, have a stent fitted and be back at work in a few months and get a large critical illness payout. Or you could be crippled by arthritis, have to give up your manual job forever, and get not a penny. 

If that doesn't sound great consider permanent health insurance instead of or as well as critical illness cover. It pays you a monthly income if you are unable to work for health reasons - pretty much regardless of the cause (exceptions may apply for pre-existing conditions) 

IdrisJazz

Critical illness is much more expensive than life cover. it is something of a gamble as to whether you will need it or not.

Life cover is not tied to a mortgage these days. So if you have cover that would pay off your mortgage today, and your mortgage debt has reduced to £30k when you claim, you still get the same payout.
You can get cover that reduces, so that it would only cover the amount outstanding (or an amount that reduces in a linear way through the term of the policy) which is even cheaper, but is less likely to leave you with a nice bit of spare cash.

Only you can decide whether you think you really need it.

Simple term assurance is pretty cheap for most people, and the potential benefit massive. But you need to consider the impact on your if your partner were to die, or either of you were unable to earn.

DullGreyGuy

InhaleMood said:

I have a call with Cavendish on Thursday about life insurance/critical illness cover, but I was wondering if I might be able to get some advice beforehand so that I feel more prepared. 
2 of us, own the property as joint tenants, not married. I am 40, he is 49, both healthy.
I'm thinking about life insurance to pay off mortgage
- If I die, my partner would sell the house and move out of the country. 
- If he dies, I would just about be able to cover the monthly outgoings. 
1) Do we need it? 
2) What happens if we pay off the mortgage early? 

I think critical illness might be more important for me. 
- If I can't work, my partner couldn't cover all of the outgoings and our savings would dwindle down within a couple of years. 
- If he can't work, again, I would just about be able to cover outgoings but it would be a struggle. 
3) Is this what critical illness cover would help with? 

Thank you in advance and please let me know if I have missed out any relevant info.

1) Up to you... do you want to be able "just about" cover it or would you rather be in a position where you know you could take X Months off for grieving and not have to worry about the mortgage? 

2) Its up to you, you can cancel the policy if it no longer serves a purpose or you can choose to keep it if you still have a need and in particular if your health has deteriorated since the purchase

3) Critical Illness is not an income replacement product. It pays a lump sum for certain conditions at certain severity. There are plenty of other conditions, particularly mental health, which CI will not respond to. I'd argue its more about being able to afford to make a significant change whilst maintaining their lifestyle... so for example being able to reduce your hours to part time or, in the case of a friend, to make changes to their home now they are a wheelchair user. 

Permanent Health Insurance is the true income replacement product who dont specify what the conditions are that make you unfit for work and provides you with a monthly/quarterly income for the duration of your illness/injury. It can be a fairly expensive policy though which is understandable when you see average claims values and the fact it's a much broader set of illnesses. There is a light version that limits payments to a few years (average claim is over 6 years) or there is ASU which is limited to 1-2 and is short term insurance meaning premiums change annually, insurers can choose not to renew etc.