Income Protection Plan

yintong5

I have been working on a financial overhaul at home lately, starting (as one might expect) with the mortgage; I’m currently working through Martins’ remortgage guide and hope to make an informed decision soon.
However, while I’ve been going through expenditure bills I came across my Black Horse Life ‘Income Protection Plan’, designed to pay out a regular monthly income (currently £1200) in the event of redundancy, or inability to work. This plan rises by around 7% each year, including the premiums, and currently stands at £58.50 per month.
I have the ability to cap the premiums at that price, but forego the opportunity, then, to raise them again at a later date.
Now, I know this all comes down to crystal balls, but if I never needed to call on the policy I would have spent an awful lot, over about 40 years, on what was basically a term assurance policy.
If, however, I decided to throw caution to the wind and ditch the policy what could I do with £60 a month that would give me a return when I retire in twenty-one years time?
Don’t get me wrong, I reckon £1200 a month is a pretty good policy to have, considering my mortgage would be covered under a separate policy, I’m just looking at the alternatives.
Many thanks for reading,
Stu

yelf

firstly: how long goes that pay out for? probably 12mths, in which case it isnt much use. so, unless you think redundancy is a realsitic concern, i would cancel it at take out full PHI. Just out of interest, are you also thinking of cancelling your house + contents and car insurance etc?

dunstonh

Now, I know this all comes down to crystal balls, but if I never needed to call on the policy I would have spent an awful lot, over about 40 years, on what was basically a term assurance policy.

It is not a term assurance policy. The BHL Income protection plan is a fully underwritten permanent health insurance policy. BHL stopped selling it around 10 years ago (when it was rebranded to LTSB Life and then later to Scot Widows). The version you have is better than their current retail version. Although an IFA could probably come in with a cheaper and equally comprehensive plan.

Don’t get me wrong, I reckon £1200 a month is a pretty good policy to have, considering my mortgage would be covered under a separate policy, I’m just looking at the alternatives.

PHI is better than PPI for accident/sickness as PHI cannot be cancelled by the insurer and can pay out for the whole term. PPI is typically just 12 months. Plus PHI has already been accepted. PPI is effectively underwritten at point of claim.

yintong5

Thanks to both of you for the food for thought.
Stu.