What
should a decreasing critical illness
policy be used for?
A
decreasing critical illness insurance
policy is just a form of
decreasing term insurance which is
looked at in the linked article. However
instead of just covering life insurance
these policies also cover critical
illness insurance definitions or
critical illness only. The most popular
use of these policies is to use them to
protect debt such as mortgage or
business debt.
If you have a repayment mortgage then
the debt over the term will reduce. Over
the term of say 25 years you will be
reducing the capital by a small amount
at first but more and more as time goes
on. This is shown in the table below:
Click Image for
Larger Picture
As you can see the mortgage debt is
decreasing and this the amount of
insurance required to clear the debt
should also reduce. A decreasing
critical insurance plans sum assured
will reduce in line with the debt owed
on a repayment mortgage as the graph
above illustrates.
If the mortgage that you have is on a
interest only basis then a
level term life insurance or
level term critical illness insurance
is recommended. However it is all down
to affordability and budget and this is
why it is best to get financial advise
on protection. To get advice from a
qualified financial adviser fill in the
enquiry form.
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