Decreasing Critical Illness Extra

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. 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 business loan which decreases.

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 the chosen policy 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 the chosen policy 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 or Critical Illness Extra 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.