Income Protection

Wutang_2

dunstonh wrote: »

would you rather a product that pays out in excess of 90% of claims or a product that only pays out in 15% of claims?

the first one I think..

jamesd

Insurance_guy wrote: »

Before the recent down-turn statistics showed that people returned to work on average within the first 3-6 months, so 12 months grace has been sufficient for most workers to get back on their feet. For that 12 months the unemployed person doesn't have to worry how to meet the bills. A thoroughly compelling answer I'd say.

Well, it's a possible reason to have unemployment insurance, though personally I avoid the premiums by keeping emergency funds that will last for much longer than a year.

Insurance_guy wrote: »

Time for serious debate

If you've got a family, you should be looking to protect them for the rest of the time that you are responsible for looking after them, not just a year and hope that you don't get long term injured or sick and take them into poverty with you. Even without a family you're getting a good deal more protection for an outcome that will have you suffering for a long time if it happens. That's classic insurance, covering a risk that's too expensive to cover as an individual.

Unemployment insurance or payment protection pays out so little for such a short time that it's viable to build up an emergency fund instead. Then you can make interest in the emergency fund instead of paying out premiums.

The choice is pretty simple: with PPI you're taking a risk with the future living standards of yourself and your family for the long term. With PHI you aren't.

WombleSW20_2

I agree with Insurance Guy. Please stop promoting PHi as the be all and end all of all health products. The best product is a combination of the individual's personal needs and their budget. I have worked in Fianncial Services and sold both PHI and PPI and they both have their strengths and weaknesses.

PHI is promoted as the ultimate health product but no-one seems to mention the high rejection rate of applicants, the (time consuming) medical reports required, the higher cost of cover and the very attractive commisison it pays the seller. PPI / MPPI / short term IP have limited cover and a tainted history and claims experience has been poor but the sort of stats that DunstonH quotes are not something I recognise these days.

And please let's avoid these impartiality slagging matches - it degrades the site. Insuranceguy clearly comes from an insurance background (atleast he's up front about it) which is more than can be said of others.

dunstonh

no-one seems to mention the high rejection rate of applicants

Not my experience. Its certainly more work to get set up due to underwriting at point of sale. Back complaints can be a pain. But clean health applications are fine.

the very attractive commisison it pays the seller.

I'm fee based so I dont care. However, in the long run a PPI can pay quite a lot more for those on commission.

The best product is a combination of the individual's personal needs and their budget.

True. However, I bet you that if you asked many people if they had been made aware of PHI when they were sold PPI, I bet they would say no.

PPI is seen as the easy retail option. Quote comparison sites rarely carry PHI (mainly due to underwriting requirements) and PPI pays more in the long run. Mortgage advisers often dont want the hassle or may not even have a PHI policy available to them.

WombleSW20_2

Dunstoneh is right - the risk of decline is naturally higher on PPI but that is the nature of products such as motor / hone insurance which are typcially undewritten at claim stage. Rejected claims normally exist where the customer has not read the policy properly or the seller has not sold it properly. The product is not the issue - it's a sales problem. The sort of experience DunstonH quotes comes from policies sold before general insurance was regulated - policies sold after this have rejection rates far closer to PHI rejection cases. DustonH - please quote figures that reflect current experience and not annecdotal experience from years gone by.

In response to your other points:

"Back complaints can be a pain. But clean health applications are fine."

Agree but in my experience most over 45 year old applicants have something that needs further investigation by the insurer. This intrusion as well as delays experienced through requesting GP reports can be painful!


"I'm fee based so I dont care. However, in the long run a PPI can pay quite a lot more for those on commission"

I am not suggesting any bias by DusnstonH but the value of commisison for PHI policies (in my experience) is much higher in 9 out of 10 cases - driven by higher premiums and longer customer retention and indemnity commission. I can therefore understand why certain IFA's prefer to promote this product option.

"PPI is seen as the easy retail option."

I totally agree. PHI is a more comprehensive, long term product and suits the need of a select group. But the beauty of MPPI / PPI is in it's simplicity. Simple concept, simple undewriting criteria and simple claims process. Until the product desigers in the PHI market come up with a more marketable, affordable product, with easier undewriting crieria, it will remain out of reach for most people.

I apologise now if I sound impartial - I am up front about the industry I work in but it is certainly not my intention to promote one product over another. I do get frustrated though by certain myopic comments that can easily mislead people outside the industry. :mad:

jamesd

WombleSW20 the difficulty I have with PPI is that it's often readily possible to self-insure for just a year of risk. Not a lot of use for a product when it's easy to self-insure.

For PHI the medical questions are discouraging to say the least and were one factor why some years back I purchased neither PHI nor critical illness cover from a particular IFA. Though concerns about the ethics of the firm (quoting one rate in my contract but another in illustrations) were the main driver and their question and complaint handling sealed the no sale deal.

Of all of the insurance cover types that I currently have, PHI is the one that I value most because it'll protect long term against a range of potentially very unpleasant outcomes that I'll have to live through.

WombleSW20_2

jamesd - I don't disagree but most consumers are not fortunate enough to have 12 months of their net salary saved in the event of sickness, accident and unemployment.

You are a good example of someone who is financially savy enough to understand the importance of managing finances properly but you are not typical in my experience.

Insurance_guy

Again it is unfair to compare PPI with PHI claims because PPI claims include unemployment and PHI doesn't. If you're sick you're sick but if you claim for unemployment during the initial exclusion period you're not covered so you're claim is rejected.

jamesd

Insurance guy, how much will PPI pay out for food, rent, utilities, council tax, clothing and children's school bills? How does this compare to what PHI will pay out for those in case of illness? PPI is generally sold to cover loan repayments only, leaving you still having to cover the rest of your living costs, whether the claim is for sickness or unemployment.

You're being unduly unkind towards dunstonh who did after all suggest both policies in his first reply, writing "The best option is to go with permanent health insurance (PHI) with a standalone unemployment only plan or to go with a PPI for the 12 month period and then a PHI with a 12 month deferment".

OshayAway

Just to clarify, IMHO ASU / MPPI does have a place and can represent good value for money to some. However, PHI should be considered as a superior alternative on the disability (accident & sickness) side of things.
One of the big plus points of ASU over PHI is that the premium is not affected by age (in most cases) smoker status, health issues or occupation class.
Where ASU is opted for over PHI, it is preferable to aviod providers with exclusions like those imposed by Ant Insurnance.