Critical Illness Articles
Is Convenience Costing You More on Critical Illness Premiums ?
When you buy a home, you have a major obligation to continue paying the mortgage company for up to 30 years or more. However, how would you continue paying your mortgage should you become seriously ill and unable to work? Could you face the chance of losing your home ?
How Critical Illness Cover Protects Your Home
Critical illness cover has become a popular way to protect your larger investments, such as a mortgage. Critical illness insurers have offered a mortgage-based cover that decreases in relation to your mortgage balance as the years pass. This is a very affordable way to ensure that you are able to pay your mortgage and keep your home if you are diagnosed with a serious illness or suffer a disabling injury.
Mortgage companies also have seen the value of protecting their mortgage investment through life insurance and critical illness covers. Subsequently, these companies have offered these products to their borrowers as a way to pay this benefit at the same time as paying the mortgage.
Are You Paying Too Much for Your Cover ?
According to statistics from Post Office Financial Services published in 2007, about half of all new homebuyers chose to purchase home, life, and critical illness insurance through their lender. Why? Two-thirds of the respondents said that convenience was the main factor.
However, your mortgage company or bank may be charging you a premium on your life and critical illness cover policies. The study shows that about 5 million homeowners could be losing a combined £600 million by purchasing these products through their lender!
Mortgage companies charge over and above the normal premiums because they know consumers will pay for the convenience. However, this means that you are often paying more premiums for less cover by opting for the more convenient route through your bank.
How Much Your Bank Overcharges
On average, mortgage providers charge two and a half times more than the normal cost of coverage! In addition, critical illness purchased through mortgage companies can be very limited to borrowers. Critical illness covers have enormous variances in the number of exclusions and included illnesses, and mortgage companies will generally not offer the most comprehensive critical illness cover. A borrower who bought his critical illness cover for the convenience could find later that his policy contains so many exclusions that a claim is not possible, except for only the direst of conditions.
For instance, Post Office Financial Services found that critical illness covers offered through Nationwide and HSBC had only 24 qualifying conditions and a high number of exclusions. In contrast, normal critical illness covers purchased directly from insurance companies usually carry about 34 to 37 qualified conditions.
Remember, there is nothing stopping a borrower from buying these insurance products elsewhere, and the products are not compulsory to obtaining a mortgage.
Although critical illness cover can be a great benefit to mortgage borrowers, it is very wise to shop around for the best policy before simply buying for convenience. Perform research on the internet or consult an independent financial advisor to find the best policy for your mortgage protection.
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