SOA/IPA Allowances/Calculation

TheCat_2

Hi Tigerfeet,

Thanks for the review, to answer your questions in order:-

Life Assurance £105 - this is a combined life/crit illness policy that I had reworked prior to br at the cheapest cost. The policy has no investment value and the OR is prepared to sell my the BI for £50 which I intend to take him up on...assuming he's sold the policy back to me surely he has to allow the ongoing cost in my soa?

Other Insurance £13 - a mortgage repayment protection policy worth £250/m if I am unemployed or unable to work due to sickness, I could lapse this policy anytime as it probably isn't worth the time/effort/cost in the event of needing to make a claim.

Haircuts £10 - I'm bald and do it myself My wife who isn't bald or BR pays for her own

Holidays £50 - Am I really entitled to a £600 holiday each year even tho BR?

Vehicle use £150 - When i went BR (sole trader) I had my van repo'd, I still needed transport to get to and from work so my wife bought a small van using her credit card on the understanding I covered the associated level of minimum payment each month. If I don't cover the card payment she's entitled to sell the van so it's a bit chicken and egg.

New question.....does my overall SOA 'have' to be net positive? If I round up the items you mention
and include eg holidays etc it'll show a monthly minus and worry the OR?

As an aside along the same lines, my wife is currently off work, she has been since July and is going onto half pay wef 1/11 until (according to her occupational health assessor) in all likelihood the new year. As a result her current contribution will have to be adjusted downwards from next month.

My AD is Jan 20 (as long as or doesn't suspend AD because he hasn't had my SOA yet)

hunt85

that life insurance/CIC is ridiculously high?! most CIC policies come with free life insurance, so just coz your policy includes both doesn't mean that its ok for it to be that expensive. If you're a smoker/have a bad medical history or family medical history then fair enough, if thats to cover over £100k then thats about right if you're middle aged etc. I am 25 and a smoker with no medical stuff against me and i was paying £30 a month with AXA for a fixed amount (which is more expensive than decreasing cover) of £100,000 cover CIC & life insurance. I think you can do alot better if you could pay that much for a smaller CIC/life ins policy and get some mortgage or income protection that would be £105 well spent as its more likely (according to stats) that you'd be unable to work due to an illness that isn't critical etc than needing the CIC/life ins. Hope this helps.

TheCat_2

Hi Hunt85,

I understand the stats for illness vs death etc and appreciate you commenting - I worked for a bank for 16years prior to going self employed in 2006.

The bit that I havent disclosed is the level of cover I've got and without going into detail £105/m is definitely good value especially in terms of the covered illnesses and payout criteria. At 39 my age is definitely against low premiums although my medical history has no skeletons. The other thing that the policy incorporates is a double payout option - contract a qualifying CI and it pays out, continue with the premiums and on death it pays again.

On the flip side as a self employed person the hoops I'd have to jump through before being eligible for mortgage protection or income protection claim are huge, either paying through the nose for immediate cover or having to incorporate a large deferred period to make premiums affordable...and even then proofing no work is a feat in itself!

I'd prefer to leave my policy untouched - can the OR really make £50 out of me for the BI and then expec me to renegotiate the policy to a lesser premium?..sounds like profiteering

hunt85

fair enough as long as you know its decent cover etc then thats good, alot of people don't review it/don't really know what the point of their cover is/what exactly it covers so as long as you're happy with it then good for you!

kepar

I would be careful as to what you put down as your wifes income. It seems that you are distorting her income to stop paying an IPA. Most OR's will ask what your wives full income is , as it is close to yours then they would expect all bills to paid 50/50. The only discrepancies being if you pay any membership fees etc. By reducing her income to £600 keeps the amount you have remaining low, it might look good on paper but when the OR discusses these figures with you I think her income will get changed. I might be wrong , they might not question it, but the figures look to convenient.

tigerfeet2006

TheCat wrote: »

Hi Tigerfeet,

Thanks for the review, to answer your questions in order:-

Life Assurance £105 - this is a combined life/crit illness policy that I had reworked prior to br at the cheapest cost. The policy has no investment value and the OR is prepared to sell my the BI for £50 which I intend to take him up on...assuming he's sold the policy back to me surely he has to allow the ongoing cost in my soa? You may find that you will have to pay it out of your surplus. I am not a 100% on this so it is probably worth starting a seperate thread and asking the question. I do know that once you pay the £50 any payout after your AD will be yours and the OR won't be able to touch it.

Other Insurance £13 - a mortgage repayment protection policy worth £250/m if I am unemployed or unable to work due to sickness, I could lapse this policy anytime as it probably isn't worth the time/effort/cost in the event of needing to make a claim. The OR probably won't allow this on your SoA and you may have to pay this from your surplus.

Haircuts £10 - I'm bald and do it myself My wife who isn't bald or BR pays for her own Still put it down

Holidays £50 - Am I really entitled to a £600 holiday each year even tho BR? Yup!

Vehicle use £150 - When i went BR (sole trader) I had my van repo'd, I still needed transport to get to and from work so my wife bought a small van using her credit card on the understanding I covered the associated level of minimum payment each month. If I don't cover the card payment she's entitled to sell the van so it's a bit chicken and egg. Hmm! this is a difficult one as it is not your debt, it is hers and the OR won't allow you to pay this but it is a business expense as you are self employed soooooo it shouldn't be on your SoA at all and should be taken off of your income but it is still a bit dodgy so I feel it may be advisable asking someone like Business Debtline for clarifycation. Which reminds me your accountants fee should not be on your SoA either.

New question.....does my overall SOA 'have' to be net positive? If I round up the items you mention
and include eg holidays etc it'll show a monthly minus and worry the OR? Yes you need to be positive so adjust things like holiday down until it balances.

As an aside along the same lines, my wife is currently off work, she has been since July and is going onto half pay wef 1/11 until (according to her occupational health assessor) in all likelihood the new year. As a result her current contribution will have to be adjusted downwards from next month. I would let the OR know that this is going to happen and ask if you can send in the new SoA when it happens or you will be doing this one and then having to do another straight away.

My AD is Jan 20 (as long as or doesn't suspend AD because he hasn't had my SOA yet)

TheCat wrote: »

Hi Hunt85,

I understand the stats for illness vs death etc and appreciate you commenting - I worked for a bank for 16years prior to going self employed in 2006.

The bit that I havent disclosed is the level of cover I've got and without going into detail £105/m is definitely good value especially in terms of the covered illnesses and payout criteria. At 39 my age is definitely against low premiums although my medical history has no skeletons. The other thing that the policy incorporates is a double payout option - contract a qualifying CI and it pays out, continue with the premiums and on death it pays again.

On the flip side as a self employed person the hoops I'd have to jump through before being eligible for mortgage protection or income protection claim are huge, either paying through the nose for immediate cover or having to incorporate a large deferred period to make premiums affordable...and even then proofing no work is a feat in itself!

I'd prefer to leave my policy untouched - can the OR really make £50 out of me for the BI and then expec me to renegotiate the policy to a lesser premium?..sounds like profiteering

No he can't

kepar wrote: »

I would be careful as to what you put down as your wifes income. It seems that you are distorting her income to stop paying an IPA. Most OR's will ask what your wives full income is , as it is close to yours then they would expect all bills to paid 50/50. The only discrepancies being if you pay any membership fees etc. By reducing her income to £600 keeps the amount you have remaining low, it might look good on paper but when the OR discusses these figures with you I think her income will get changed. I might be wrong , they might not question it, but the figures look to convenient.

Kepar, the OP has done his SoA correctly.

kepar

He might have, but the OR when he talks to you, can ask how much your other half earns , this is to work out the percentages. Iwas trying to say that he may be under the limit for now, but on percentage terms his wife would have to contribute more and that would put him in IPA territory. Otherwise you can always claim that your partner gives enough to keep you under an IPA.
Tigerfeet did the OR just accept your figures or did he not go through the figures with you???????????????????????

TheCat_2

Kepar,

I see what you're driving at but my property is in my sole name and the debt was accrued before I met my wife let alone got married...I don't see how the OR can insist my wife contributes more when my BR is nothing to do with her. She is solvent in her own right with her own pre-existing commitments and she pays her way in the property by buying all the food and groceries etc for he both of us??

philnicandamy

kepar wrote: »

He might have, but the OR when he talks to you, can ask how much your other half earns , this is to work out the percentages. Iwas trying to say that he may be under the limit for now, but on percentage terms his wife would have to contribute more and that would put him in IPA territory. Otherwise you can always claim that your partner gives enough to keep you under an IPA.
Tigerfeet did the OR just accept your figures or did he not go through the figures with you???????????????????????

Tigerfeet not been bankrupt...came VERY close though

TheCat wrote: »

Kepar,

I see what you're driving at but my property is in my sole name and the debt was accrued before I met my wife let alone got married...I don't see how the OR can insist my wife contributes more when my BR is nothing to do with her. She is solvent in her own right with her own pre-existing commitments and she pays her way in the property by buying all the food and groceries etc for he both of us??

all the examiner is interested in is that she pays her fair share of living expenses the OR could argue though your OH has an interest in the property even though its in your name

TheCat_2

I suppose my wife does have an interest in having a roof over her head but on the flip side if push came to shove she'd be quite within her rights to move out and rent her own place and the OR wouldn't have a leg to stand on as she's not bankrupt?

We've always had it set up so I pay the bills and she buys the food/petrol etc - it works out about equal but its not a pure 50% of everything split as she's got her own commitments from before we met.

I suppose I'll have to put it down as it is in reality and argue the toss with the OR if he thinks she's not paying enough