Income protection - what do I need?

NewHouse_3

Having read through a number of the articles on the site, I am a bit confused as to what insurances I should have, especially in the current financial climate.

What has also made me think about this is when I went to remortgage, my new advisor is an IFA, not just a mortgage broker and recommended I take out critical illness cover along with a life insurance policy, that would pay off my mortgage and give me a lump sum should I become ill with one of 23 different conditions. It was only going to cost around £6 per month so I thought it was worth having for only that amount but I have been asked to go for a medical, presumably due to previous family history and myself having an intolerace to gluten. This is not something I wish to do as the medical itself seems quite invasive, involving a full physical examination, blood and urine tests. So my question is - is this cover something worth going through such a medical for? Looking at it with fresh eyes, only being covered for 23 conditions seems quite limiting.

Also, the above policy also does not cover me if I lose my job. It's unlikely but I would still like to be covered for this. Again, looking at the articles on the site, it seemed sensible to look at something to cover me for this. It seems this is only available with accident and sickness cover anyway and when I got a quote it was only a few pounds more than the critical illness cover and appears to have no requirement for a medical or any medical-related forms to fill in. Downside being, it only gives me an income of half that which I currently earn and only for 12 months. It does not specifically cover my mortgage and would not pay it off if I was ill or unemployed for longer. On the upside, it will almost certainly provide me with a higher monthly income than relying on benefits and will give me extra money for bills on top of only mortgage payments.

So my question is really - do I need both policies? And are there any other income/mortgage protection policies I should look at?

Just a bit of background, I am only 23, in good general health apart from my dietry needs, am slightly overweight but my dad has an auto immune disorder that may be hereditry which is asked about on the critical illness forms I have been asked to fill in.

feisty1

Pls note on an Open Discussion Forum you will be offered opinion not advice, if you later find you have based your decision on opinion and it was the wrong one you have no comeback However, if u later felt yr IFA's recommendation was unsuited to their personal circumstances & had grounds to complain about the advice you have received, the complaints route would be open to you.

quote=NewHouse;17213911] but I have been asked to go for a medical, presumably due to previous family history and myself having an intolerace to gluten. This is not something I wish to do as the medical itself seems quite invasive, involving a full physical examination, blood and urine tests. So my question is - is this cover something worth going through such a medical for?

Insurance is a precaution against a possible unwanted outcome. From yr application form, the Insurance Company have judged that they require more details to make a proper judgment about the risk involved in providing you with insurance. To be invited for a medical is not unusual, they are simply assessing the risk.

Quote also, the above policy also does not cover me if I lose my job./So my question is really - do I need both policies? And are there any other income/mortgage protection policies I should look at?

"One size doesn't fit all" you need to have a detailed discussion with yr IFA as to yr requirements.

Quote:Just a bit of background, I am only 23, in good general health apart from my dietry needs, am slightly overweight but my dad has an auto immune disorder that may be hereditry which is asked about on the critical illness forms I have been asked to fill in.[/quote]

Maybe on reading this paragraph back you will understand the need for further information.

You should note that your home is at risk if you do not keep up the repayment of loans secured against it.

dunstonh

This is not something I wish to do as the medical itself seems quite invasive, involving a full physical examination, blood and urine tests. So my question is - is this cover something worth going through such a medical for?

You are going have to do this in future if you ever want life or critical illness cover. It will also be treated as a pre-existing condition for many mortgage payment protection plans and budget income protection plans. An underwritten [at point of sale] income protection plan would require it.

Looking at it with fresh eyes, only being covered for 23 conditions seems quite limiting.

Statistically, the figures on CI are that 1 in 6 men will suffer a claimable event before 65. Life assurance is 1 in 5. So, its not a lot different. Mortgage payment protection is 1 in 12.

Also, the above policy also does not cover me if I lose my job. It's unlikely but I would still like to be covered for this. Again, looking at the articles on the site, it seemed sensible to look at something to cover me for this.

It is a financial need. However, as mentioned the stats indicate that its less likely you will claim on it than CI.

It seems this is only available with accident and sickness cover anyway

It is available as a standalone unemployment plan.

when I got a quote it was only a few pounds more than the critical illness cover and appears to have no requirement for a medical or any medical-related forms to fill in.

Correct. However, they underwrite you at point of sale and rule out pre-existing conditions and anything linked to pre-existing conditions until you have been clear for a certain period. Typically 1-2 years. However, some medical conditions will mean you are never clear. Your intolerance to Gluten for example. Any medical condition linked to that would result in your claim being rejected.

Plans which dont ask the questions at point of sale give the insurer the opportunity to reduce cover and refuse claims later.

Downside being, it only gives me an income of half that which I currently earn and only for 12 months.

Or 24 months if you bought a 24 month version.

So my question is really - do I need both policies?

Yes. You have a financial need for both. Whether you choose to do both is up to you but the need exists.

And are there any other income/mortgage protection policies I should look at?

Personally, I prefer permanent health insurance to mortgage payment protection. Best option is to combine the two in some way by either using a MPPI for the first 12 months and a PHI for the period after 12 months to retirement or use the PHI with a low deferment and a standalone unemployment plan.

This is a conversation you should be having with your IFA. An IFA is only as good as the information they are given. We need to know what you are thinking and your reasons. We have an obligation to tell you what you need as a maximum. Most people wont insure to a maximum as in reality you cant afford to. By the time you pay the pension, life assurance, critical illness, PHI, MPPI etc you would have nothing left to live on. So, you do have to compromise most of the time and pick what it most appropriate. (btw, pension is the one you are most likely to use. 4 out of 5 people make retirement yet too many ignore it until its too late)

The other thing to consider is that if you have a spouse/partner in future and have children, what are you going to do about life assurance then? Are you going not take any out because of the medical requirements and let your family suffer the risk? You are going to have to face a decision at some point.

NewHouse_3

Thanks both for the info. Will do some reading up on the permanent health insurance and will go back to my IFA to see what further advice he can give me. Think I need to be a bit clearer about what I want and will need to ask for him to explain things better to me in future.

mswannabe_2

Dunstonh

How I wish you were local to our area as you seem extremely knowledgeable and professional. Do you know of any way I can source a decent IFA in North West area? The last IFA we used in August was excellent but had to give it up due to current economic climate. She wouldn't recommend anyone she knew to give advise on Income Protection etc as they weren't able to offer whole of market advise. The IFA we used pre Aug 08 was hopeless and sold me an accident and sickness policy (previously discussed on another thread) which provides inadequate cover.