Is Mortgage Critical Illness Insurance Right for You?

Jakub Jirsak/
min read
Updated: 13 June 2023
Written by
Insuranceopedia Staff
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Key Takeaways

  • Mortgage critical illness insurance can help you and your family out of a crisis if an illness prevents you from making your mortgage payments.

A house is the most expensive thing many people will ever buy, and they might go heavily into debt in the process. Mortgages help people finance their home ownership dreams but they also carry significant risks. One of those risks is no longer being able to make mortgage payments due to a critical illness, whether it's because the mortagor is no longer able to work or has had their finances drained by expensive medical treatments.

Thankfully, with mortgage critical illness insurance, default and foreclosure don't have to be on the horizon. In this article, we'll go over what that policy covers and who should seriously consider purchasing it.

What Is Mortgage Critical Illness Insurance?

Mortgage critical illness insurance offers financial protection against mortgage defaults due to critical illnesses. You can purchase it separately or in combination with other types of mortgage insurance, such as mortgage life insurance, which pays out a benefit to help pay off the mortgage upon the policyholder's death (but be sure to consider these Top Reasons to Forgo Mortgage Protection Life Insurance before purchasing).

Critical illness insurance covers a range of serious health issues, including heart attack, stroke, and cancer. Any of these might require extensive treatments, hospitalization, and very long recovery times—all of which can put jeopardize a family's finances if they fall on the primary breadwinner. Mortgage critical illness insurance provides financial protection while those expenses pile up and the income diminishes.

Are You a Good Candidate for Mortgage Critical Illness Insurance?

Many people can benefit from buying mortgage critical illness insurance, but if you might need it more than others if you fall under one of these four categories.

1. You put little money down and owe a substantial amount

The less you owe on a mortgage, the less of a financial risk you face if you were to develop a critical illness. In this case, you may have enough in savings to sustain yourself while recovering or be able to borrow adequate sums from family or friends in your time of hardship.

If you still owe a substantial amount, however, you will likely burn through your savings and still have a long way to go. If your debt is large, it's unlikely that your loved ones will be able to shoulder it and you will need to rely on insurance protection.

2. You have a family history of critical illness

Of course, no one is immune to critical illness, but those who are more susceptible to them should take extra precautions. It can take months or years to recover from a critical illness, and that's a very long time to go without being able to earn enough to fund your mortgage payments.

3. You don't have a lot of savings

If you succumb to a critical illness, you'll need to dip into your savings to keep yourself afloat while you recover. If you don't have a substantial amount saved up, however, it won't be long before you struggle to pay your mortgage. If you wouldn't be able to coast on your savings for very long, mortgage critical illness insurance can be a real lifesaver.

4. You don't have other solid insurance options

Other forms of insurance can help you out financially if you suddenly fall ill. A solid disability insurance policy, for example, would act as a form of income replacement (find out Why You Need Disability Insurance). Most people can even get disability insurance through the government, although the coverage is somewhat limited. If none of your current policies would cushion the financial blow of a critical illness, mortgage critical illness insurance might be right for you.


A critical illness is bad enough on its own. Adding financial hardship on top of it can make things much worse. If you don't have the assets to pay your mortgage if your income is suspended, mortgage critical illness insurance is a sound investment.

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