What is Decreasing Critical Illness Cover?

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How Does Decreasing Critical Illness Cover Work?

Why Do Homeowners Choose Decreasing Critical Illness Cover?

Things to Consider Before Taking Out a Policy

Planning for the unexpected is an important part of managing your finances, particularly if you have a mortgage.

Decreasing critical illness cover is a type of insurance that provides financial support if you are diagnosed with a serious medical condition during the policy term.

Unlike level cover, where the payout remains the same, this type of protection reduces over time.

It is often taken alongside a repayment mortgage, as the cover amount aligns with the outstanding loan balance.

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How Does Decreasing Critical Illness Cover Work?

This policy is designed to reflect the way a repayment mortgage decreases over the years. The amount insured reduces gradually, meaning the potential payout will be lower as time goes on.

The idea is that if you were to develop a critical illness, the policy could help cover the remaining mortgage balance, reducing financial strain at a difficult time.

Premiums for decreasing critical illness cover typically remain fixed, which makes it a more affordable option than level cover.

Many homeowners choose this type of policy because it provides essential protection without unnecessary costs, ensuring they are not paying for more cover than they need.

Why Do Homeowners Choose Decreasing Critical Illness Cover?

One of the main reasons people opt for this type of cover is affordability. Since the payout reduces over time, the cost of cover is usually lower than other types of protection.

For homeowners with a repayment mortgage, it offers a practical way to ensure their home is protected if they are unable to work due to a serious illness.

Many people also choose this policy because it provides peace of mind.

Knowing that there is financial support in place can be reassuring, particularly for families who want to secure their home against unforeseen circumstances.

Things to Consider Before Taking Out a Policy

While decreasing critical illness cover is well-suited to covering a repayment mortgage, it may not be the right choice for everyone.

The payout amount reduces over time, so if you have other financial commitments that require a fixed level of protection, a different type of cover might be more suitable.

It is also worth thinking about additional protection, such as income protection or life insurance, to provide more comprehensive financial security.

Everyone’s circumstances are different, so taking the time to find the right cover can make a big difference.

If you are unsure which type of protection best suits your needs, speaking to a professional can help.

At UK Moneyman, our team of mortgage and protection advisors can explain the different options available, helping you find the right level of cover for your situation.