What if I become ill and can't pay into my life insurance?
You probably know that life insurance could be really important for supporting your family if you die. It is a sensible investment into your family's future.
Many people, however, do not have any additional support. It is well worth thinking about what would happen if you were left unable to work, perhaps by an illness. You may need to think about how you would manage to pay your mortgage, your bills, childcare costs and even your life insurance premiums. And what would happen to your life insurance policy if you were no longer financially able to meet your monthly payments?
There are certain steps you can take to protect your finances and your life insurance policy if you become ill, such as a waiver of premium or critical illness insurance.
What is 'waiver of premium'?
When you buy your policy, you may be able to add 'waiver of premium' at an additional cost. This would basically mean that after you have been too ill to work for a certain period of time (determined by your individual policy) your insurance company would pay your premiums for you, thereby keeping your policy active. You would have to meet the specific definition of incapacity laid out by your insurer in order to have your premiums waived. Your insurer may continue paying your premiums until your policy ends, you are fit to return to work, or you no longer meet their definition of incapacity, depending on the terms.
Waiver of premium can help pay for your life insurance during a difficult time. If you are incapacitated and unable to work, however, paying for your life insurance may not be enough on its own. You will probably have numerous other financial obligations to meet, such as a mortgage and bills. This is where critical illness cover could help.
What is critical illness cover?
Critical illness cover can either be bought alone or in conjunction with a life insurance policy. The purpose of critical illness cover is to pay out a tax free cash sum upon the diagnosis of a critical illness that your policy covers. This cash sum could be invaluable, helping you and your family through a hard time. You can use the money however you like, whether it's adapting your lifestyle to your new condition or keeping up with mortgage payments.
In some cases, if your critical illness cover is bought as a combined critical illness and life insurance policy, your cover will end after you've made a claim. This will mean your life insurance is no longer active if you make a successful critical illness claim. However, some policies will allow you to keep your life insurance cover after making a critical illness claim, and vice versa.
Click here for more information on critical illness cover.
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Tags: insurance, life insurance, critical illness cover, family, advice