income protection insurance?

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shiwen55
shiwen55 Posts: 124 Forumite
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in Insurance & life assurance
Hi,


I have income insurance in case of sick pay, up to £1000. Also would have income from health insurance that I have, and most probably, SSP, good.


Income insurance says, all I can have, adding up all, can't be more than £1000 that they say and they'd only top up the sick pay to their cover so they might well only pay, let's say, £200 to make whole thing £1000, bad no 1.


The government says a couple need say about £600 monthly to live on and they'd pay rent or etc. Well, if I happen to be sick and my wife was out of work, then the authorities would consider this £1000 and leave us with £600 so we would be asked to pay the difference, rent, am I right? If so, bad no 2.


I think paying for income insurance, knowing that you have other health insurance that covers you and also, it is taxable and capped, not worth having it, what do you guys think?


shiwen55
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  • dunstonh
    dunstonh Posts: 116,374 Forumite
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    Is the type of income protection you have the PPI type or the PHI type?

    PPI type has underwriting limits as well as income limits. PHI type only has income limits. So, this £1000 limit you are seeing could be down to the type of income protection you have or it could be that you dont earn enough and are hitting the income cap.

    I think paying for income insurance, knowing that you have other health insurance that covers you and also, it is taxable and capped, not worth having it, what do you guys think?

    Proper income protection (the PHI type and not the PPI type) is important. You get very little benefits from the state and if you think that is going to be an adequate replacement then you are in for a shock should you ever be unlucky to suffer a long term illness.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • shiwen55
    shiwen55 Posts: 124 Forumite
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    Hi,


    You confused me more !!


    It's through GMB union, %50 of my gross salary and I chose to reduce it to £1000, paid for up to 1 year on 61st day. I don't know what PHI or PPI is :(


    If you think I am high earner, well I'm not. If I was, then %50 would have looked good figure :)


    shiwen55
  • shiwen55
    shiwen55 Posts: 124 Forumite
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    Hi,


    I checked on GMB union website, it is PHI not PPI :)


    Google is very handy !! (watch out for SkyNet)


    So you think it's worth it? Okay


    shiwen55
  • dunstonh
    dunstonh Posts: 116,374 Forumite
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    It's through GMB union, %50 of my gross salary and I chose to reduce it to £1000, paid for up to 1 year on 61st day. I don't know what PHI or PPI is

    PPi is the budget type of income protection. The type usually best avoided and heavily sold by comparison sites. It can be right for some people but most are better off with the PHI type. The fact yours is set to age 61 would indicate it is the PHI type.

    So, in your case, you chose 61 and £1000. So, that is a choice.

    You are limited in how much income you can cover yourself as the Govt does not allow people to be better off through not working than working. The companies have different limits but typically it is upto 66% of income and remember that the benefit is paid tax-free (caveat applies). Some providers will be as low as 50%. It all comes down to quality of product as these things are not all equal.
    So you think it's worth it? Okay

    A decent PHI plan is well worth it. A budget PHI plan is often not worth the paper it is written on. Little differences may not seem much but they can be. Are you covered for own occupation or all occupations for example? One word difference but enough to be a major difference in the liklihood of payout.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • shiwen55
    shiwen55 Posts: 124 Forumite
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    It's paid for up to 1 year, 12 months and on the 61st day of sickness, not age :( until 69th birthday.


    On the GMB website it says clearly it is not PPI, but I would call them to find out more. Thanks for all these information.


    One more question: the payout is only for a year, is it normal if it's PHI?


    shiwen55
  • dunstonh
    dunstonh Posts: 116,374 Forumite
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    One more question: the payout is only for a year, is it normal if it's PHI?

    Only the rubbish budget PHI plans and the PPI plans pay out for a maximum of 1 year. The standard/comprehensive plans pay out for as long as your working life if need be.

    Unions do have a history of retailing poor quality financial products. Their focus has been on the size of the commission paid. I have seen some really awful Union sold products over the years. I dont know if that is the case here as I dont know the product details enough. However, if it only pays out for 1 year then I would position that as a budget plan and I personally never recommend budget plans.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • shiwen55
    shiwen55 Posts: 124 Forumite
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    Thanks for opening my eyes, I'm now in conduct with insurers who provide PHI until retirement age.


    I will keep you updated


    shiwen55
  • csgohan4
    csgohan4 Posts: 10,587 Forumite
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    you got a pretty raw deal.


    A lot of the insurers do 60% of your salary with an exclusion period of between 6 months to 1 year when you stop working due to health reasons all up to retirement age.
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • shiwen55
    shiwen55 Posts: 124 Forumite
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    Hi,

    I have been offered a '2 year' period insurance because of medical condition I have and BMI index (?!) with British Friendly, paid anytime until 67 but for 2 years max. Apparently I didn't qualify for longer and retirement age benefit.

    Is 2 years okay?

    shiwen55
  • dunstonh
    dunstonh Posts: 116,374 Forumite
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    Is 2 years okay?

    Not if you are ill enough for longer than 2 years.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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