Is critical illness insurance worthwhile?

Critical illness insurance pays out to the policyholder in the event of his or her being diagnosed with one of a number of serious illnesses scheduled in the insurance policy. The cost of the premiums will depend on the size of the pay out needed and a popular choice is to cover an outstanding mortgage balance.

Whether critical illness insurance is worthwhile in your particular circumstances will depend on a number of factors such as:

• The cost of the premiums weighed against the benefits offered - some people consider, for instance, that premiums are too expensive for something that may never be paid out on;
• The range of illnesses covered and, especially important, any exclusions relating to previous or pre-existing medical conditions;
• The alternatives to critical illness insurance - for example, mortgage payment protection insurance could provide cover for the mortgage payments specifically (though shorter-term, usually between 12 - 24 months') for a wider range of illnesses and could also pay out in the event of involuntary unemployment, whilst life insurance would also be necessary if the intention is to provide financial security for surviving dependents.