What kind of policy do I need?

sturgeon

I was looking for a mortgage protection policy for critical illness-i.e. if diagnosed with a critical illness I would have my entire mortgage paid off. However I see that on this site that kind of policy isn't particularly advised. However, an income protection policy I'm not so sure of as don't they only pay out for a year or so?

Ideally I'd like a policy that would help me out as long as I need it, or would pay off the mortgage, if I am diagnosed with a critical illness or cannot work anymore. If there's one with an added option to cover redundancy or loss of job etc, or a combined product, that would be good.

What do you suggest I go for? I'd only like to pay around £10 a month or so on this policy....maybe a little more.

dogbot

would pay off the mortgage,

Critical illness then - pays a lump sum

a policy that would help me out as long as I need it

PHI then I think? Not sure if this does just keep paying but I think it does.


I think you need to go and see an IFA. They can explain each product, look at your circumstances including mortgage, income, age, heath etc and help you to find the right policy for you.

I don't know why critical illness gets a bad press, it has helped several people I know a great deal. I also think that if you look more carefully on this website you will see plenty of people supporting it. I am in the process of purchasing it along with life insurance to protect my first mortgage, though I before I sign I have asked for some PHI quotes.

An IFA can help you find a policy and provider that, whatever the product, covers the range of illnesses you want covered.

sturgeon

PHI-permanent health insurance I'm guessing?

I'm very reluctant to see an advisor as I had to use a mortgage adviser with my property purchase (who were also IFA's and sold me insurance policies I later cancelled) and was screwed over a bit by them. Also the policies they sold me were vastly more expensive than others on the market.

One thing I don't understand is why would you get critical illness cover...which will protect you if you can't work to get an income, but also get life insurance? The critical illness means my mortgage is paid off whilst i'm still alive so there's not that worry there, but doesn't life insurance pay when I die so what's the point?

Who are the best providers for critical illness cover and PHI?

dogbot

Yes that is what I mean't.

Sorry to hear about your experiences. Were they definatly IFA's and not tied to a bank? We have had nothing but excellent experience with our chap - having compared his quotes with others ourselves it seems comparable so we are happy to let him take the hassle out of it for us.

I don't really know who the best direct providers are. You need to consider the policy coverage for illnesses and which are most appropriate for yourself, which is where and IFA should be able to help.

One thing I don't understand is why would you get critical illness cover...which will protect you if you can't work to get an income, but also get life insurance? The critical illness means my mortgage is paid off whilst i'm still alive so there's not that worry there, but doesn't life insurance pay when I die so what's the point?

Sorry I don't understand the question. They cover two different things. The critical illness will pay me a lump sum should I be diagnosed with a critical illness covered by the policy. This would enable me to clear a large part of my mortgage debt.

Life insurance provides a payment to my benificiary (in this case my partner for now) if I die, leaving something for them to help, essentialy pay off the mortgage. You can die from lots of things, not just an illnesses coverd by the CI policy - hit by a bus, stroke, heart attack, murder, whatever!!

My older brother died 2 years ago aged 28, having had a substantial CI policy and death in service from his work, plus a life benfiit and having seen that happen to one so young, i want similar cover. Its all a personal choice. I want to look more at PHI before I make up my mind between that and CI - so I have made some time tomorrow night to do just that!

pedro123456

Sturgeon.

Critical illness, don’t be dazzled by it bright all singing all dancing lights.
No doubt you will have looked at some CI cover and thought to yourself, “well if I get diagnosed with this condition or that condition you are covered and your mortgage is paid off.

In theory that’s right but IC’s being IC’s it aint that simple, as you can imagine payout settlements can be quite substantial, and therefore loopholes and T&C are quite substantial to avoid settlement.

Definitions of illness are also a point of concern. If you look at every one of the Core Definitions Adopted by the IC’s (these definitions are under the guidance of the ABI( the IC’s minders), and if you had any medical knowledge you would see the IC’s definitions are different from your GP or Consultants Medical definitions.

The IC’s definitions have to have bells on in order to make the definition harder to attain, and therefore reducing payments.

Now for me CI wasn’t worth a light and it wasn’t a cheap policy either, but I aint you. I wish you better luck than I had.

Should you decide to go down the CI route its important you talk it over with someone before hand, maybe a local IFA or Broker and make sure you tick all the right boxes, and talk you through it.

The IC will snatch your hand of when paying premiums but you must ensure you have the support and backing “if” having to claim because if at all possible they will get out of paying at any price.

Good Luck

dunstonh

However I see that on this site that kind of policy isn't particularly advised.

A few people have said that but I cant see Martin telling people that an insurance policy with a successful claims rate of 85-90% with a typical 1 in 5 chance of claiming is not advisable when Martin promotes the use of MPPI where the successful claims rate if far lower and typical claim rate is closer to 1 in 12.

However, an income protection policy I'm not so sure of as don't they only pay out for a year or so?

Proper income protection pays out until retirement if you want. However, the budget payment protection plans pay out for just 1 or 2 years.

I'd only like to pay around £10 a month or so on this policy.

Dont bother. You are not going to get anything of real value for just £10pm (apart from perhaps pure life assurance).

I'm very reluctant to see an advisor as I had to use a mortgage adviser with my property purchase (who were also IFA's and sold me insurance policies I later cancelled) and was screwed over a bit by them. Also the policies they sold me were vastly more expensive than others on the market.

IFAs are the cheapest distribution channel for products under advice. Are you sure it was an IFA and not a tied agent or multi-tie? You may get small differences between different IFAs as we can all negotiate different terms. However, that tends to affect the pence and not the pounds. Multi-tie or Tied agents are the most expensive distribution channels. (for example, I compared an AXA policy from a tied agent to the IFA pricing and the IFA pricing was £40 pm less than the tied agent. However, the same cover was cheaper by another £15pm by using another company).

Many whole of market mortgage advisers are tied to one or a panel of insurers (multi-tie). Dont mix them up with IFAs.