Table of Contents
1. Introduction
2. What is Life Insurance?
3. What is Critical Illness Insurance?
4. Why You Should Consider Life & Critical Illness Insurance
5. How Life & Critical Illness Insurance Work Together
6. Types of Life & Critical Illness Insurance Policies
7. The Role of Independent Advisors Like EHF Mortgages
Introduction
Life is unpredictable, and while we all hope for the best, it’s essential to be prepared for the unexpected. Life and critical illness insurance offer financial protection and peace of mind, ensuring that you and your family are covered if the worst happens. Whether it’s providing for your loved ones after you’re gone or safeguarding your income if you’re diagnosed with a serious illness, these insurance policies can help secure your financial future. In this article, we’ll explore what life and critical illness insurance are, how they work, and why they might be the right choice for you.
What is Life Insurance?
Life insurance is a policy that pays out a lump sum to your beneficiaries if you pass away during the term of the policy. It’s designed to provide financial support for your family or dependents, helping cover expenses like mortgage payments, living costs, or even funeral expenses. It is also used to repay outstanding liabilities, like a mortgage or outstanding finance.
Life insurance ensures that if something were to happen to you, your family wouldn’t be left struggling financially. You can think of it as a safety net that provides peace of mind, knowing your loved ones will be looked after.
How Life Insurance Works
When you take out a life insurance policy, you agree to pay a regular premium—monthly or annually. In return, the insurance company agrees to pay out a lump sum if you pass away during the term of the policy. The amount paid out, known as the sum assured, can be used by your family to cover any financial obligations they may have.
There are several types of life insurance policies available:
• Level Term Life Insurance: This policy pays a fixed lump sum if you pass away within the term of the policy.
• Decreasing Term Life Insurance: Designed to cover debts like a mortgage, the payout decreases over time as the outstanding balance of your loan decreases.
• Whole of Life Insurance: This policy covers you for your entire life and guarantees a payout whenever you pass away.
What is Critical Illness Insurance?
Critical illness insurance provides a lump sum payment if you are diagnosed with a serious illness listed in the policy. These illnesses typically include conditions like cancer, heart attacks, strokes, and other life-threatening or debilitating conditions. Some types of Critical Illness insurance offers partial payments for lesser, but still important conditions.
Unlike life insurance, critical illness insurance pays out while you’re still alive, helping you manage the financial strain of dealing with a serious illness. The payout can be used to cover anything from medical expenses and mortgage payments to lifestyle changes, like adapting your home or reducing your working hours.
Common Illnesses Covered
While policies vary, common critical illnesses covered include:
• Cancer
• Heart attacks
• Strokes
• Multiple sclerosis
• Parkinson’s disease
• Major organ transplants
The exact list of illnesses covered will depend on your policy, so it’s important to review the terms carefully when choosing a plan.
Why You Should Consider Life & Critical Illness Insurance
Both life and critical illness insurance are designed to provide financial security, but they cover different scenarios. Life insurance ensures your family is taken care of if you pass away, while critical illness insurance helps protect you financially if you’re diagnosed with a serious illness. Here’s why you might want to consider having both:
1. Financial Protection for Loved Ones: Life insurance provides a payout that can help your family maintain their standard of living, pay off debts, and cover essential expenses.
2. Income Replacement: Critical illness insurance can replace lost income if you’re unable to work due to illness. This can be a lifeline if your salary is essential to covering your family’s day-to-day costs.
3. Peace of Mind: Both types of insurance offer peace of mind, knowing that whether you pass away or become seriously ill, your family won’t be left to bear the financial burden alone.
How Life & Critical Illness Insurance Work Together
While life insurance and critical illness insurance are two separate policies, they often work well together. Many insurers offer combined policies that cover both life and critical illness under one plan. This means you can make a claim for a serious illness during the policy term, but once a payout is made, the policy will end.
Alternatively, you can take out separate life insurance and critical illness policies. The benefit of keeping these policies separate is that it allows you to claim for a critical illness without affecting your life insurance coverage, ensuring your family is still protected if you pass away later.
Types of Life & Critical Illness Insurance Policies
When exploring your options for life and critical illness insurance, it’s important to understand the types of policies available:
Standalone Critical Illness Insurance
This is a separate policy that covers only critical illnesses. If you’re diagnosed with a covered illness, you’ll receive a lump sum payout. However, it does not provide any coverage in the event of death.
Combined Life and Critical Illness Insurance
This policy covers both life and critical illness within the same plan. A payout will be made for either a critical illness or death, but not both.
Children’s Critical Illness Insurance
An important additional option from most Critical Illness Insurers, allowing you to provide a similar benefit should any of your children suffer a serious Critical Illness. A lump sum paid to the parents on diagnosis will not affect the cover either of the parents has, and normally is provided without any additional underwriting.
The Role of Independent Advisors Like EHF Mortgages
Choosing the right life and critical illness insurance policy can be a complex decision, especially with so many options available. Working with an independent advisor like EHF Mortgages can help you find the best coverage for your needs. We provide whole-of-market access, meaning we can find policies from a wide range of insurers, ensuring you get the best deal.
At EHF Mortgages, we understand that no two people have the same needs. Whether you’re looking to protect your family, your mortgage, or yourself from financial hardship due to illness, we can help guide you through the process.
Conclusion and Next Steps
In uncertain times, securing your family’s future with life and critical illness insurance is more important than ever. Whether you’re interested in standalone policies or combined coverage, having the right plan in place can provide peace of mind and financial security when it’s needed most.
Ready to protect your family and your future? Contact EHF Mortgages today to discuss your options for life and critical illness insurance and find a policy that fits your needs.
