Thousands of homeowners a year may not be able to pay off their mortgages under new Financial Services Authority (FSA) proposals to label critical illness cover as "higher risk," warns Legal and General.
The company estimates more than 116,000 homeowners will suffer from critical illness during their mortgage term.
Many would not have the protection in place if the proposal in FSA¹s CP160 and CP174 consultation papers are carried out.
ABI figures show annual sales of critical illness (CIC) policies have increased from 600,000 in 1999 to 1.2 million in 2002. Around 60% of figures are to protect mortgages.
A Legal & General spokesman said: "If the FSA makes it harder for advisers to sell CIC then they will not promote it as a valuable addition to the basic mortgage protection with the subsequence of homeowners and families being left inadequately protected."
