Critical illness
insurance:
Critical illness insurance will cover you in the event of a
serious illness such as cancer, coronary
artery by-pass surgery, heart attack, kidney
failure, major organ transplant, multiple sclerosis and stroke. Additional
conditions covered by this insurance can include aorta graft surgery, benign
brain tumour, blindness, coma, deafness, heart valve replacement or repair, loss of limbs, loss of
speech, motor neurone disease,
paralysis/paraplegia, Parkinson�s disease,
terminal illness and third degree burns. Not all insurance companies will
necessarily cover all of these illnesses, whilst some insurance companies will
cover more; it is always worth reading the terms and conditions before you sign
anything.
Critical illness insurance policies typically offer a
tax-free lump sum if you are diagnosed with one of the above illnesses and meet
the conditions outlined in the policy contract. The lump sum is most often used
to cover the remainder of the mortgage, although can be spent on home alterations or medical care etc.
Life insurance:
Life insurance is usually taken out if your family or
partner is financially dependent on your income. Life insurance can also be
purchased as life assurance and in this form, can offer a method of protection
cover and savings. However, most people simply use it as a form of financial
protection for their mortgage and therefore their family. There are three main
types of life insurance: term insurance, whole life insurance and endowment
insurance. More information can be found on these forms of life insurance on the
Association of British Insurers� website, listed in the resources section of
this article.
Mortgage life
insurance:
Mortgage life insurance is essentially the same as a
decreasing (lump-sum) term life
insurance policy and is designed to pay out a lump sum upon the death of
the policy holder, should it occur during the term of the mortgage. The size of
the lump sum will decrease over the term of the life insurance policy, in the
line with the outstanding mortgage repayments. E.g. As you pay off your
mortgage, the amount of cover will decrease as the need is less significant.
Mortgage protection
Mortgage protection, also called mortgage payment
protection, is a type of insurance that can help protect mortgage payments and
associated household costs in the event of unemployment, illness or an accident.
Through mortgage payment protection, you can insure your monthly mortgage
payment, monthly life premiums and the monthly cost of your buildings and
content insurance. Typical mortgage protection cover could include:
* Unemployment and disability insurance cover
* Accident or sickness
* Unemployment only insurance cover
* Disability only insurance cover
Loan payment
protection:
Loan payment
protection policies are designed to protect the repayments to any loans you may
have taken out. They work on a similar basis to mortgage payment protection, but
for a wider scope of borrowing. Premiums for loan payment may be greater than
those for mortgage protection.
Income protection:
In the event of unemployment, sickness or an accident,
income protection insurance offers a limited income. Do make sure you understand
the terms of the policy however, as the income that you received through cover
may be significantly less than the income you receive through employment.
Private medical
insurance
Private medical insurance is a policy which will provide
financial cover for medical
treatment in the event of an acute condition. According to the
Association of British Insurers, the majority of insurers define an acute
condition as �a disease, illness or injury that is likely to respond quickly to
treatment which aims to return you to the state of health you were in,
immediately before suffering the disease, illness or injury, or which leads to
your full recovery.�
Private medical insurance provides reassurance for people
who know that treatment is available promptly should they become ill or injured.
Resources:
The Association of British Insurers
Consumer Insurance Comparison Research
Insurance Guide
