You want a lump sum if you were to die or become very seriously ill and could not work again. What sort of insurance do you need?

You need Life Insurance and Critical Illness Insurance policy.

STEP 1 of 2
Type of cover
Life Insurance       Mortgage Life Insurance
 
Cover Level (£)

Number of years
Do you want:  
Critical illness cover
Family income benefit
 

The Life Insurance provides the lump sum if you were to die whereas the Critical Illness Insurance pays out a lump sum if you are diagnosed with any of a long list of serious and debilitating illnesses scheduled in the policy.

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Is there a waiting period to receive payment on a Critical Illness claim?
All Critical Illness policies require you to survive a specified number of days following diagnosis in order to have a valid claim. The typical survival period is 28 days but some insurance companies have reduced this to 14 days.
Are future children included on a Critical Illness policy?
All natural, step and legally adopted children are insured under a Critical Illness policy so long as they are aged between 1 and 18 years (although some companies only consider children from aged 3).
Is there a minimum or maximum premium for critical illness cover?
Minimum premiums vary from company to company but they can be as little as £5 per month.
What is the difference between Critical Illness cover and Terminal Illness cover?
Critical Illness Insurance is much more comprehensive than Terminal Illness cover. 1 in 5 men and 1 in 6 women suffer a critical illness before their usual retirement age.
What happens if your condition improves after making a claim on your Critical Illness policy?
Once the insurance company has paid you the money is yours to spend how you like. The policy is terminated and your insurer has no interest on how you live your life or indeed whether your condition improves or is healed.
If you buy a policy which combines both types of cover and have a claim under its critical illness provisions, the policy will pay out - but it will not pay out again if you were subsequently to die. As soon as a combined policy makes any payout, the policy automatically terminates and there are no more premiums to pay - and no more benefit to be had.

If you do opt for separate life and critical illness policies, then each policy pays out without any reference to the other policy. Therefore, if you contracted a critical illness, then the critical illness policy would pay out and if you subsequently died the life insurance would pay out. So in these circumstances there are two claims and two payouts.

However, a combined policy is likely to be significantly cheaper than buying separate life insurance and critical illness policies.

 

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