You should consider mortgage life insurance and serious illness insurance as two separate items and decide independently if you need either or both.
To take out a mortgage, all you require mortgage life insurance i.e. the type of insurance that will pay off your mortgage in full if you die.
Only you can decide if you also require and/or can afford serious illness cover. And if you do decide that you need serious illness cover, you need to consider whether the policy offered by your mortgage bank is good value when compared with policies offered elsewhere. Factors you'll need to consider is whether or not you are insured elsewhere e.g. through work scheme or pension conditions. And also whether your existing health insurance covers you for critical illnesses.
My personal opinion - when I was taking out my mortgage, I got the heavy sales pitch about serious illness cover. In the end I decided that I went to the bank to get a mortgage, not serious illness cover, so why should I buy serious illness cover. If I were to decide to buy serious illness cover, I'd check out all the policies on the market, think about it for a while and buy the best one. Given their price, they are not the type of financial commitment I would want to commit to without having thought it through carefully and certainly not something I'd buy under time pressure from a bank sales representative.
In my particular case, when I checked out the options, I found that I was already well covered through a sickness scheme attached to my work pension (guaranteed % of income in the event of retirement or long term absence through illness) and my health insurance (for the cost of treating whatever illness).