Considering the possibility of long term or terminal illness is not something anyone wants to think about, but having the correct cover or protection in place could save you a significant amount of added stress and money.
According to the Association of British Insurers (ABI) and Group Risk Development (GRiD), in 2023 group and individual protection policies paid out a combined record of £7.34 billion in claims.
Mortgage director, Mark Chadwick discusses the difference between income protection and critical illness cover, and which could be the most suitable option for you.
Income protection vs critical illness cover
Both types of cover will support you financially in the case of unexpected events such as injury or illness but they are designed for very different circumstances.
- Critical illness will be paid out in a lump sum in the case of a diagnostic of a specified life-threatening illness, such as cancer. Upon making a valid claim, you’ll receive a one-time, tax-free lump sum that you can use as needed. It is important to consider that policy providers will only pay out if the illness is listed within their covers and each policy provider generally covers around 70 illnesses. Having a lump sum payment will help alleviate any financial worries such as regular mortgage payments.
- Income protection on the other hand has a very different structure. In the case of an unexpected event such as injury or illness, income protection will provide a monthly income of up to 60/70% of your gross salary until you are ready to return to work, meaning you will have a steady flow of income. Income protection also has more scope, as it covers a broader range of conditions, providing more financial security in the case of unexpected events.
Which is right for you?
At the end of the day, choosing the right policy depends on your personal circumstances, but it is important to consider the benefits and drawbacks to each of the different covers. It is important to remember that certain policies will have higher premiums dependent on certain circumstances such as if you are a smoker or work in a high risk job. Generally, income protection is advisable for anyone working and can provide cover for both employed and self-employed individuals.
How can PM+M help?
When dealing with complex matters such as protection it is vital to find the right policy for you. Our expert protection and mortgage adviser, Mark Chadwick, can guide you through the process, scope the whole of the market and offer the right policy and premiums for your circumstances. We can take the stress away so you are confident you are making the right decisions to protect your future.
Contact Mark using the button below.
PM&M Mortgages Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority.
