Critical illness/Income Protection

sawdox

Hi, I've just had a review of my critical illness policy. It's for £60000 with legal and general and I was paying £13 a month and now they want £34 a month.
I'm 45 with a wife who doesn't work and an 18 year old son. I'm a teacher.
Are these policies any good? What is the difference between this policy and an income protection policy. Do I need either or am I wasting my money? I've had this policy for about 10 years and have never questioned the fact that I have it, I've just paid the premiums. Will it have a surrender value? Obviously, if I couldn't work through some sort of illness the household would be in big trouble. What are the alternatives?
Any advice would be gratefully received!!
thanks

dunstonh

Are these policies any good?

If you need to claim on them then yes they are. However, that goes for any insurance. CI itself does have a 1 in 6 chance of claim before retirement. That compares to 1 in 5 for life assurance so statistically, there is a good chance of a claim.

What is the difference between this policy and an income protection policy.

CI pays out a lump sum on diagnosis of a specified critical illness. Permanent Health Insurance (PHI) pays out a monthly income until retirement (or your specified end age) or when you can return to work if you are ill and unable to work.

Do I need either or am I wasting my money?

You will have a financial need for both. Whether you choose both, either or neither is a personal preference.

Will it have a surrender value?

Depends on the type of plan. At £3 it was massively cheap. At 45 its closer to what you would expect. However, is it a renewable plan, reviewable or investment backed? Could it be looking at another increase in 5 years time or is it now guaranteed?

Obviously, if I couldn't work through some sort of illness the household would be in big trouble.

As I said, you have the financial need for PHI and CI.