Critical illness and death or income protection

NEWBIE

HI all, newbie here buying my first house alone so after as much advice as possible.

the house im buying is £118,000 ive secured a mortgage on a variable rate which i hope was a good thing

my question is though would you take out critical illness and deatn cover this is an extra cost to the mortgauge, but reccomened by my advisor.
this cost £25 a month

or there is income protection which pays out roughly £1000 a month if im ill or break my leg etc etc. but costs £38 a month.

ive heard bad reports about both so looking for advice please, are they both a waste of time???

do you have it on your mortgage??

or is it worth defintly having one??

also an other extras you would avoid on the mortgauge like homecare etc etc.

thanks in advance, this house buying thing is stressful lol.

VIGILANT22

NEWBIE wrote: »

ive heard bad reports about both so looking for advice please, are they both a waste of time???

http://forums.moneysavingexpert.com/showthread.html?t=2273327

Read this thread about what happens to people when they have no insurance,

People would rather take advice frm their friends wh are electricians, chefs, pilots etc that insurance is bad, than take the advice of an adviser as to why people should be covered.

Ok so you've just taken on the biggest financial commitment you will ever have in life. If you're made redundant, have an accident become ill how will you pay the mortgage? If you dont pay the mortgage you have your home taken back.....

Are you single/married/children
Do you have sick pay provided at work if so for how long

herbiesjp

Here is someone who did take out cover:

http://forums.moneysavingexpert.com/showthread.html?t=2269079

So whilst not compulsory, which situation would you prefer?

Make sure your adviser is not just tied to one company, as you may be able to get better cover with a different provider if he is.

kippygirl

Look carefully at what you're actually paying for.

Do you have dependants? If not, then I personally don't see the point of having life insurance. If you do have a partner/spouse and/or children then I would definitely take out life insurance to cover you at least up until mortgage likely to be paid off and kids left school. Our life insurance covers us until we are each 55 and pays out £150,000 if one of us dies before that age. If we don't then it pays out nothing. It costs less than £20 per month (taken out when we both about 30 with no pre-existing health problems). Two and a half years ago and with two young children I was diagnosed with breast cancer at the age of 35 so I am rather glad that I took out this cover even though I'm doing ok for now and may not need to cash in this policy.

With income protection, you are often only covered for limited illnesses and some policies only pay out for a limited time. So you need to be sure that you can (a) afford this extra cover and (b) that it's going to cover you for what you think it will. It is not a case of all such policies paying out for any illness.

With my first house, my finances were very tight then and it was just me so I had no insurance but I had planned for worst case scenario of losing my job and no income by the fact that I had two spare bedrooms that I could have rented out if it came to it.

Shop around anyway as we saved a lot of money by just getting a few different quotes over the internet rather than sticking with the life insurance we originally had with our mortgage provider.

VIGILANT22

The information on income protection is wrong, wrong, wrong aarrgghh

VIGILANT22

kippygirl wrote: »

Look carefully at what you're actually paying for.

Our life insurance covers us until we are each 55 and pays out £150,000 if one of us dies before that age. If we don't then it pays out nothing. It costs less than £20 per month (taken out when we both about 30 with no pre-existing health problems). Two and a half years ago and with two young children I was diagnosed with breast cancer at the age of 35 so I am rather glad that I took out this cover even though I'm doing ok for now and may not need to cash in this policy.


I am glad you're recovering.
Life insurance for death does not cover breast cancer as a critical illness
Your type of policy has no cash in value

I find it very alarming when lay people try to "give advice" on insurance...it is such a complex area best left to the pros

Read this thread to see what happens when no insurance

http://forums.moneysavingexpert.com/showthread

kippygirl

VIGILANT22 wrote: »

I am glad you're recovering.
Life insurance for death does not cover breast cancer
Your type of policy has no cash in value

I find it very alarming when lay people try to "give advice" on insurance...it is such a complex area best left to the pros

Read this thread to see what happens when no insurance

http://forums.moneysavingexpert.com/showthread

Vigilant22 - it will pay out if I die from breast cancer (or anything else) before age 55. I'm not clear why you think that wouldn't be covered?

By "cash in", I mean that my husband will claim on the policy if I die before age 55.

As for leaving decisions on insurance (or any other matter) to a professional advisor, I would always advise a lay person to exercise their own judgment as well and to check what exactly they're covered for as per my original post.

VIGILANT22

in that case you need to read up on income protection.....I agree people should educate themself's and understand insurance...particularly if they're going to share info with others

"cashing in the policy" made it sound as if yr going to claim on it ie critical illness

NEWBIE

im just after advise on the pros and cons etc, not looking for arguments or debates.

thanks for the advice so far.

getmore4less

The key thing with this sort of insurance is deciding what you really need or want to cover.

You also need to check assumptions and alternative actions

One asumption(for couples) is often that you need to make sure that the other person can afford the house on death so you get life cover, an alternative is to not bother with life cover overpay and accept that you may need to sell and down size to eliminate/reduce a mortgage.

This is the difference beween a need and a want.

Cover with work is often enough BUT jobs can be lost.

The worst case senario for most people is one person needs permanant care so neither has an income his needs cover for a non worker as well as a worker this is often overlooked.

Very complex area and a lot of senarios to consider especialy once dependant kids are involved.

dunstonh

im just after advise on the pros and cons etc, not looking for arguments or debates.

The board is not authorised to give advice. It can only discuss and debate.