If you have a family history of ill-health or if you drink above the average limitor are a heavy smoker you might be under the misapprehension that life insurance cover or critical illness cover may be extreamely pricey. A manager at Norwich Union, Mr X, says this isn’t alwaysthe case, “Manyof thosesmoking, eating ‘too much or drinking will possiblyshy from cover for fear of being overly penalised for their badhabits. Hence, they will more than likely find that these essentialforms of financial protection cost even less than they thought.”
Mr Y a specialist re-insurer, says only 25 per cent of the working community have life insurance cover and only eleven per cent havecritical illness cover, even though it is generally understood that if you are employed and/or have dependants and a mortgage, this assurance is crucial. Many, many people are taking unnecessary risks.
If a person were to die unexpectedly their life insurance policy will pay out on their death and with a bit of luck will be enough to pay a mortgage off, and/or provide any dependants with financial security. In the case of critical illness insuranceit administers a dividend and helps at this time. Even though medicine is improving all the time and people are getting better from life-threatening illness, they are usually unable to work periodically or are forced to retire; this is when a tax-free cash lump sum can create the financial security needed.
If a person does drink or smoke insurance payments will be higher but they do vary considerably between one insurer and another. And they also vary between critical illness insurance and life cover. Legal and General doesn’t raise premiums until a person is consuming the equivalent of 4 pints daily. For a non-smoking 34year old, drinking less than 9 units per day, for 120,000 pounds of life insurance cover, the standard rate is 18.10 pounds per month. If you consume between 40 and 75 units weekly it increases to 28 pounds per month.
In relation, it will cost a 25 year old non-smoker 19.10 pounds per month for 100,000 pounds of critical illness cover . For a smoker this increases to 32.60 pounds monthly, but the premium only increases again if you smoke more than two packets a day.
**A family history of conditions such heart disease or diabetes does not mean that the insurance payments will be certainly higher. A 34 year old physiotherapist, Mr L, comes from a family that has many members suffering from heart disease although his brother and his parents do not. Last week, he and his wife took out life insurance and critical illness cover with Axa from Legal and General, providing them with a cover of 135,000 pounds. Their monthly payment costs 38.50 pounds and Mr L was quite surprised that his families medical history didn’t influence what they pay.
A managing director of Axa, Mr X, says if you can’t afford to do both, it is sensible to cover your mortgage with life insurance and then take out as much CIC as is affordable.
”Everyone who can afford it should have critical illness cover,” he says. “If you’ve got family dependant on you you should have life insurance and critical illness cover. The only people who may not require critical illness are those with excellent, not just standard, employee benefits.”