There has been some good news recently with regard to death rates from breast cancer; a report has revealed that the death rates from this disease in the UK have fallen faster than any other major European country. The British Medical Journal has indicated that survival rates have increased significantly since the 1980s, with Cancer Research UK adding that sufferers are more than twice as likely to survive ten years than they were in the 1970s. The ten year survival rate for this cancer is estimated to be 77%. In addition, ten year survival rates for leukaemia, bowel and ovarian cancers have also overall more than doubled since the 1970s. There are many reasons for this success including faster diagnosis, better surgery, more effective radio therapy and new drugs. So real progress is being made, with this trend set to continue into the future.
Although all the above is excellent news, it can cause problems with regard to keeping a roof over your head. The reason for this is that in the past, when unfortunately, people succumbed to disease much easier, the life policy attached to the mortgage was triggered and the debt was paid off. But now as modern medicine is keeping people alive much longer and allowing many people to adopt a normal lifestyle after recuperation, financial problems could occur during this period due to a gap in their cover.
Only 20% of people have critical illness cover that would help pay your mortgage off if you had a life threatening illness and therefore bridge the gap. Unfortunately, the life cover that most people possess is ineffective in these circumstances. So why do people not buy critical illness cover integrated with their life cover? The main reason for not buying this potentially valuable cover is because most consumers view it as expensive, followed by a nagging suspicion that it is very difficult to claim on the policy.
Critical illness policies do tend to get proportionately more expensive as we get older as the risk of a critical illness rises much faster than a stand alone death claim, particularly as we reach our forties and fifties. I believe the policies are competitively priced, but I accept that sometimes people’s budgets do not stretch far enough to cover the whole mortgage with a critical illness plan. The good news is that the plans have become more flexible to allow you to for example to cover the whole mortgage if you die and in addition a portion of the loan if you are diagnosed with a critical illness. So in short the plans can be flexible and tailored to suit your budget, and with many providers paying out in excess of 90% of all claims there should be little deterrent to taking out a policy.
Overall critical illness for many is a matter of priority. For example in 2003 42% of people said they would cancel their satellite or cable TV subscription if they needed to save money. Now this figure has fallen to 26%. This statistic indicates to me that satellite and cable TV has been gradually moving from being a luxury to becoming a necessity in the household budget. In theory critical illness should be more of a necessity than it was in 2003 as medical advances have made it a more relevant product, and should be central to the household budget. So if people did turn off their satellite or cable TV which I still regard as a luxury, in most cases they would be able to buy a critical illness policy to cover the whole of their mortgage with the savings made. It is just about what is important to you.
If you would like to review your protection needs you should consult an Independent Financial Adviser (IFA). Kieron Bassett Financial Services are an Independent Financial Advisers and we are open six days a week. Contact the office on (01524) 832057 or via e-mail info@kieronbassett.com to arrange an appointment.
Kieron Bassett CertPFS