income protection quote..is it reasonable?

dunstonh

Wutang wrote: »

All I am saying is that if you die - life insurance pays out. If also, you are diagnosed with one of the defined illness of the critical illness policy, it will pay out.

The grey area usually stems from those who do not know what they are covered for.

Published stats on CI policies show they pay out in about 85% of claims made. Things are better on that front than in the past and the FOS guidelines on non disclosure has been a significant reason for that.

Aviva published their stats earlier in the year: (copied and pasted)

The company said that it paid out 90% of all claims in 2008 compared to 84.7% a year earlier. Meanwhile the number of claims declined for non-disclosure of medical facts at the policy’s outset fell to 2% for the year, down from 4% in 2007. The number of claims declined or conditions not covered by the policy at outset was 8%, with cancer being the most common cause of claims.

So, Wutung is correct in that "not covered" is more common than non-disclosure. Its a good job that the 90% paid out didnt fall for the Watchdog misrepresentation and cancel the policies.

There are always going to be issues with the odd claim not going as it should. However, you have to be wary of minority issues not clouding your judgement on the whole thing. Whilst Aviva showed 90%/8%/2%, the average is closer to 85%/10%/5% .

The media is very damaging when it comes to reporting things. Look at any subject (not just financial services) and you will usually find misrepresentation or an over egging of the issues or a bias or even a complete load of BS.

lisyloo

All I am saying is that if you die - life insurance pays out. If also, you are diagnosed with one of the defined illness of the critical illness policy, it will pay out.

Yes agreed.
Sam is not talking about going without either type of protection, but some people would rather cover the inability to work rather than specific illnesses.
You see the two might not coincide.
If you get an illness which is not specified on CI and can't work then you have no protection.
I think Sam understand the difference, although I agree many don't.

sam1970

lisyloo wrote: »

Yes agreed.
Sam is not talking about going without either type of protection, but some people would rather cover the inability to work rather than specific illnesses.
You see the two might not coincide.
If you get an illness which is not specified on CI and can't work then you have no protection.
I think Sam understand the difference, although I agree many don't.

Thank you all for the positive debate ..I agree with lisyloo and this is another reason why I am not comfortable with CI cover as I could for example contract an infection like MRSA which will stop me doing my job because of the risk of infecting others but it is not a serious illness in the list of CI cover so i will end uncovered while all conditions in CI list will be covered in the income protection cover.

yelf

sam1970 wrote: »

Thank you all for the positive debate ..I agree with lisyloo and this is another reason why I am not comfortable with CI cover as I could for example contract an infection like MRSA which will stop me doing my job because of the risk of infecting others but it is not a serious illness in the list of CI cover so i will end uncovered while all conditions in CI list will be covered in the income protection cover.

You have your car insured yes? So lets you are driving along and a dear runs into the road - you crash and the car is a right off!

Thankfully you can get a nice new car with your insurance. But what if you break your neck, suffer brain damged, lose your sight? Fat lot of good a nice car is if you cant use it. A new car wont pay off your mortgage.

Yes there used to be insurers wriggling out of it. Not any more

stephenni1971

sam1970 wrote: »

Thank you all for the positive debate ..I agree with lisyloo and this is another reason why I am not comfortable with CI cover as I could for example contract an infection like MRSA which will stop me doing my job because of the risk of infecting others but it is not a serious illness in the list of CI cover so i will end uncovered while all conditions in CI list will be covered in the income protection cover.

On the other hand you could suffer several conditions that are covered by CIC and not get a penny from your income protection if you recover within your deferred period.

You pay your money and you takes your choice - but both CIC and PHI have their advantages and disadvantages.

sam1970

stephenni1971 wrote: »

On the other hand you could suffer several conditions that are covered by CIC and not get a penny from your income protection if you recover within your deferred period.

You pay your money and you takes your choice - but both CIC and PHI have their advantages and disadvantages.

I agree but that is not a problem for me as if i fall sick the good NHS pays full salary for 6 months then half a salary for another 6 months which will cover the 52 weeks deferred period.

lisyloo

Thankfully you can get a nice new car with your insurance. But what if you break your neck, suffer brain damged, lose your sight? Fat lot of good a nice car is if you cant use it. A new car wont pay off your mortgage.

Agree Yelf, but there are a few options here.
Some people who are disabled and can't drive have cars for other people to transport them. Also in some cases you can ask for a cash settlement.

On the other hand you could suffer several conditions that are covered by CIC and not get a penny from your income protection if you recover within your deferred period.

Agree Stephenni, but if you are ill but can work (after a period) then you don't need the payout do you? (not saying it wouldn't be nice but many people can't afford to insure for what is nice to have).
Most people would set their deferred period to match company sick pay, so there is then no gap in their income.

You pay your money and you takes your choice - but both CIC and PHI have their advantages and disadvantages.

Agreed.
I'd still rather cover loss of income.
But if people are in doubt then I guess the best advice is for them to talk it through with a professional advisor who understands all the pros and cons and talk it through for their circumstances.