Critical illness insurance - is it worth the money?

helenbutler

My husband and I are both 30 and in the process of paying off our university debts. Our financial advisor is pressuring us to take out a critical illness policy that would cost us £50/month - as we are both fit and healthly with no family history of serious illness, I am trying to explain to him that £600/year would go a long way to help paying our creditors. I'd really appreciate some advice please!

dunstonh

as we are both fit and healthly with no family history of serious illness, I am trying to explain to him that £600/year would go a long way to help paying our creditors. I'd really appreciate some advice please!

How would you pay the creditors if you suffered a critical illness. Most people who claim on insurance policies were fit and healthy when taking them out.

At your age you are just about getting to the point where it starts to become unaffordable to take out CI cover and get a decent sum assured. My youngest claiment was aged 26 and I had a 31 year old get paid out not too long back.

When this subject has come up before, the advisers on the board have all said that CI claims seem to outweigh deaths nowadays.

All insurance is a waste of money until you have a claimable event. Then it stops being a waste and becomes a Godsend.

If you adviser is a tied agent, then an IFA will be able to offer the cover cheaper (and usually by a lot). Also, a fee based IFA should be cheaper on that sort of premium. If you agree a fee with the IFA but use the commission to offset that fee then the premium will come down.

dogbot

If you don't feel it is worth it then don't buy it, you have to make you own decisions. Is this an IFA or someone from your bank? £50 each or for both of you? What level of cover?

About 1 in 5 suffer a claimable event i think is the stat

_Andy_

helenbutler wrote: »

- as we are both fit and healthly with no family history of serious illness,!

Which is exactly when you should take such policies out, rather than waiting until you're in ill health/older when the price will be significantly higher.

yelf

if you dont take it you are saying that you are happy to take the risk that you wont suffer a CI. Thats a big risk when you consider what at stake. You,probably have your car and house insured - so why wouldnt you ensure your health?

dreamypuma

I think the OP needs to speak to an IFA. I am no fan of Critical Illness Policies. The OP may want to take a look at a good permanent health policy, and combine it with a life policy.

Depends on personal circumstances really. Not enough info to recommend.

somewhatnew

The reality is any money spent on an insurance policy is a total waste of money... be it car, buildings, travel, critical, life, etc...

...until the day you need to claim on the insurance.

At that point it becomes the smartest thing you ever did.

People buy insurance because they have a liability to cover; ergo people buy car insurance because they have a car, travel insurance because they go on holiday, etc. People dont by travel insurance if they arent going anywhere.

If you can afford to keep paying your debts and would be comfortable with any ensuing lifestyle changes if one of you fell critically ill then no cover needs to be taken. If you would sufffer financially then yes, you should have some cover. If £50 a month is to much then what would be reasonable? 20? 30? Best to get some cover whilst you are young and health. Far cheaper that way in the long run.

One thing to watch out for - make sure you have full income protection insurance (this covers everything) before you go for critical illness cover (covers typically 30-40 conditions).

JoolzS

I'm glad to see that CI cover has become so cheap since DH and I were nearly pressured into taking it around 15 years ago - at that time they wanted nearly £150 per month.

I rejected it then, and I'd reject it now. However, if you are happy to throw away £50 per month - then go for it - just don't expect to ever get a payout. You may have some minor symptom right now that you don't even know about, but the insurance company will make sure to know about it, in the future, and then refuse to pay out - that's how they make their money - by not paying out.

Julie

stephenni1971

JoolzS wrote: »

You may have some minor symptom right now that you don't even know about, but the insurance company will make sure to know about it, in the future, and then refuse to pay out - that's how they make their money - by not paying out.

Julie

CI claim statistics have been increasing yearly and are now in the mid 80% range. Insurance companies pay out when there is a valid claim.

Too many people buy insurance and then forget what it is/what it covers and then when the worst happens it is all the insurers fault.

You get a specific list of what is covered at the time of sale.

dunstonh

I'm glad to see that CI cover has become so cheap since DH and I were nearly pressured into taking it around 15 years ago - at that time they wanted nearly £150 per month.

Its a little cheaper than it was but it doenst cover as much as it used to. £150 sounds very high and I wonder if it was an old investment backed policy (like Abbey Life or Dunbar used to sell) and/or a tied agent sale where premiums are much higher than an IFA.

just don't expect to ever get a payout.

1 in 6 men is likely to have a claimable event before retirement.

You may have some minor symptom right now that you don't even know about, but the insurance company will make sure to know about it, in the future, and then refuse to pay out

Evidence please?

that's how they make their money - by not paying out.

Published stats show that around 85% of claims are paid out with only 5% down to non-disclosure (aviva recently posted 90% of claims paid out). A minor ailment is highly unlikely to result in a refusal.

The FOS have guidelines on non disclosure and things are much better since then.

However, you do still see claims rejected because applicants did not disclose they had a double coronary bypass or whatever. Its a bit hard to claim inadvertent non-disclosure in those cases and they are basically attempting to commit fraud.

fizzystutter

You never know when something is going to happen. We never even thought anything would happen to us, as we both seemed healthy and very active.

The first time we took out a mortgage we didn't take critical illness insurance. When we remortgaged we made the right decision and took it.

Three weeks before our wedding day last July, my fiance suffered a brain haemorrhage (stroke). At 34 years of age we would have been in a world of trouble as during the following 12 months I hardly worked (self employed) because of the constant visits to hospital.

If it had not of been for the critical illness insurance we may have lost the house, after all what is more important ? work or health ?

Because of our decision to take out a policy we are mortgage free and don't have the stress of a trying to find a huge chunk of money to pay the mortgage.

My advice... Take It ! don't even think about not doing it.

You may think your invincible... but these things happen.

James