Decreasing Critical Illness Cover

Pays out a lump sum in the event of death, earlier diagnosis of a terminal illness or meeting the definition of one of the named critical illnesses within the term of the plan, or pays an additional payment in the event of carcinoma in situ of the breast and low grade prostate cancer. The sum assured reduces throughout the term at a rate chosen by the customer of 7%, 8%, 9% or 10% per annum.

This contract offers both guaranteed and reviewable premiums.

Target market

Mortgage

Where there is a need to protect a repayment mortgage with a policy that pays out the decreased lump sum of the policy in the event of death, terminal illness (if life expectancy less than 12 months) or critical illness.

Business

Where a lump sum is required to:

  • Cover the loss of a key person.
  • Purchase the shares owned by a director or partner.
  • Cover a decreasing business loan.

Suitable if customers

  • Want to take advice on the suitability of the product
  • Require a lump sum to cover a capital and interest mortgage that decreases by either a rate of 7%, 8%, 9% or 10%.
  • Require a lump sum to cover a business loan that decreases by a rate of 7%, 8%, 9% or 10%.
  • Need a decreasing sum to cover a mortgage in the event of death, terminal illness or specified critical illness and have dependants, and are not willing to self-insure or do not have funds elsewhere.
  • Have a business need to cover the loss of a key person, to provide finances to purchase shares of a director or partner in the event of their death.
  • Have medical conditions that do not prevent provisions of cover and are happy to be underwritten.
  • Can afford relevant monthly premiums for Decreasing Life Insurance with Critical Illness Cover and who are UK resident. 

Unsuitable if customers

  • Wish to purchase direct without advice
  • Choose a mortgage interest rate that exceeds the chosen policy interest rate.
  • Have an interest only mortgage, so there will not be sufficient cover to pay off the mortgage.
  • Want their policy level to remain the same throughout the life of the policy.
  • Do not need death, Terminal Illness and Critical Illness Cover / without dependents and are willing to self-insure and have sufficient funds elsewhere.
  • Do not have a business need to cover the loss of a key person, to provide finances to purchase shares of a director or partner in the event of their death.
  • Want a product to pay a monthly benefit if unable to work for a period of time.
  • Want a product to pay a benefit if unable to work for a period of time due to accident or injury (IPB)
  • Have health conditions that may result in cover not being issued.
  • Require a non-underwritten journey.
  • Are unable to afford Decreasing Life Insurance with Critical Illness Cover and are not UK resident.

Amount of Cover

  • No minimum sum assured. Driven by minimum premium.
  • Maximum sum assured:
    £3 million - if Specific Work Tasks definition under TPD applies, or
    £2 million - if Own Occupation definition under TPD applies.
  • The amount of cover decreases roughly in line with the way a repayment mortgage reduces during the term of the policy.

Term

  • The minimum term allowed is 5 years (2 years if Life Insurance with Critical Illness Cover is chosen).
  • The maximum term allowed is 40 years.

Age restrictions

  • The minimum age to take out a policy is 18. It is possible for a life of another policy to be taken out on a 17 year old by an adult with insurable interest. This policy can then be placed in an Absolute trust with the 17 year old as the beneficiary. 
  • The minimum age at the end of the policy is 29.
  • The maximum age for buying a policy is 64.
  • The policy must end by their 70th birthday.

Premiums

  • Reviewable.
  • Payable monthly or annually by Direct Debit.

Options available

Benefits automatically included

Other information

  • For joint life policies, benefit is paid on the first critical illness claim or death, whichever occurs first.