What is mortgage critical illness cover?

Mortgage critical illness cover is special form of critical illness insurance that has been designed to pay the mortgage of someone who is suffering from a critical illness.

The policy will pay the mortgage of a customer who survives the survival period (usually around 28 days after first diagnosis but varies from insurer to insurer) while they are suffering from the illness, even if that means paying the rest of the mortgage off.

Why do I need mortgage critical illness cover?

A person’s mortgage is one of their biggest monthly outgoings, and in many cases now makes up around 50% of an average homeowners salary. Should a customer fall ill and be unable to earn money, they need to ask themselves how their family would survive financially. Is the customers other halves income enough to live off, if they earn money at all?

In the majority of cases the answer is no, and someone paying the mortgage of that customer would make a huge difference. Many people will argue that they get sick pay from their workplace, although those who are on contracts, or self employed will not. The truth is that many critical illnesses will see you off work for a long time, if you return at all, and even the most generous company sick pay schemes often stop paying out after six months.

Those who earn a bonus or commission for their work will often only be paid their basis salary as sick pay, which in many cases will not be enough either.

Where does mortgage critical illness cover come from?

Mortgage critical illness cover is a version of critical illness insurance, which was created by Dr Barnard in 1983. Dr Barnard was the first doctor in the world, along with his brother, to perform heart transplant surgery, and did a lot of work with patients with heart problems.

He noticed that many were struggling financially as a result of being unable to work, and were not concentrating all their efforts on getting better as a result.

He created the first policy in south Africa nearly 30 years ago with just four critical illnesses on the list and since then the product has spread worldwide, with one policy now having over 160 different illnesses on it.