Critical illness insurance...

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The critical illness policy is one of the most popular forms of mortgage-related insurance in the UK.

In the event of a serious illness, such as cancer, or a heart attack, a critical illness policy can pay off your mortgage in full. Each insurer will have specific guidelines on what constitutes a critical illness, but you will usually have the option of covering yourself against total permanent disability. The exact terms of the policy will always be disclosed and explained to you in full.

Critical illness cover will provide a tax free lump sum on diagnosis of a critical illness by a registered medical practitioner: it could then partly be used to pay for medical treatment if you so wish. You could, for example, pay off most of the mortgage and still keep some of the benefit for this purpose.

A point to remember is that age and certain lifestyle factors have a major effect on the premiums that critical illness insurers will offer: smoking, for example, will usually make your premiums more expensive, though the degree to which this is the case may vary widely from insurer to insurer, so it is always worth speaking to an impartial advisor, who can make sure that the quotes you are being given are competitive.