Protecting a Mortgage A mortgage is a big financial commitment, a mortgage is usually taken in either a single name or joint names. Whether the mortgage is a single or joint application critical illness cover can be an affective way to protect the home. For example if on a joint mortgage one of the mortgage holders gets a critical illness, their income will be gone either temporary or permanently. Usually when taking out a mortgage a couple will use both their incomes when working out how much they can afford and if one income reduces or stops the mortgage payments can become a struggle or impossible to meet. The lender will reposes a property if the mortgage payments are not made. By taking a joint critical illness cover if either of the applicants got a critical illness then the repossession could be avoided. Typically most mortgage are taken on a repayment basis and thus the debt reduces over the term. A mortgage critical illness cover would reduce in the same way that the debt decreases and thus will always be sufficient to repay the mortgage in full. If a mortgage is taken in a single name then the need for protection becomes even more so. This is because if the applicants income is gone due to an illness then there is no other applicants income left to rely on. In cases like this a single life policy could be taken to prevent repossession, again the sum assured and term would be set match that of the mortgaged debt.

Protecting a Family The step above protecting the mortgage is often the only type of critical illness cover that is taken out. This is because when you take a mortgage many people get advice from a financial adviser or mortgage broker. These professionals will highlight the need for cover and as you are making a large financial commitment and thinking about finances it is a good time to review what you have. However once the mortgage is clear a household will still have many other financial commitments such as Credit Card and Loan Payments, Utility Bills, Pension Contributions, Food Shopping, Clothes Shopping etc. These soon add up and if the person with an illness never returns to work or returns to work after a long period the households finances can be affected. For this reason either having a lump sum from a policy or a monthly income form a family income benefit policy. Can be an effective way to protect the family.

Protecting a Business Business Protection Insurance is looked at in more detail in a different section of the website. However we will have a brief look at it here as to how it can be used with critical illness cover. If a key person or shareholder gets a critical illness he or she could be out of their role either temporary or permanently. A lump sum insurance policy could be taken on the key person by the company to allow the company to continue and either employ someone else to carry out the key person role or offset the loss until the key person returns to work. With critical illness cover for shareholder things work differently, the policy is again taken out by the company on the life of the shareholder, if they get an illness they will be off work for a significant amount of time. The company keeps the funds and if it looks as though the shareholder will not return to work and be active the funds are used to buy the shareholders share capital. I a similar way the funds are used to buy the shares from their estate if they die from the critical illness.