The majority of homeowners under 40 with a mortgage have failed to take out critical illness cover, according to Mortgage Advice Bureau.

And the broker revealed ‘an evident lack of awareness’ with a worrying four in 10 not knowing what the cover is nor why it’s important.

Critical Illness Cover pays out an agreed tax-free lump sum if you are diagnosed with one of a range of illness or diseases listed in your policy documents. It can ease financial pressure during emotionally difficult periods.

Too expensive?

Its survey also revealed that of those who are aware of critical illness cover, more than a third thought that it was too expensive, while 30% didn’t think they needed it.

Brian Murphy, head of lending at MAB, said: “As a society we don’t like to plan for the worst, and there’s a tendency for younger homeowners to stick their heads in the sand and hope for the best. Yet having a critical illness policy in place can take away the worry of how you would cope financially, giving you peace of mind should the worst happen.”

He said there’s also a preconception that cover can be costly, but in reality £75,000 of CIC for a non-smoker born in 1991 working in an office environment, would be £12.15 per month.

“It’s important for those who are getting on or moving up the property ladder to understand what financial protection is available to them, and also to build it into their monthly household budgets,” Murphy added.