Income protection

Chappers28

I am just in the process of buying my first house and am trying to sort out what insurance I need. I know I need buildings and contents insurance but I am confused about what other insurance I need. My mortgage adviser agreed with me that I probably didn't need life insurance as I have no children and am buying on my own. My critical illness would be quite high as I have hypertension in the family, so I don't know whether it would be worth having it. So we looked into income protection. I am a teacher and was quoted about £68 a month on an increasing level with Friends Provident. I have been looking into quotes on comparison sites and have found other quotes between £16-30 a month. Do I need income protection? Who should I do this with? Is my mortgage advisor swindling me with the income protection quote? Please help, I am so confused about what to get?

dunstonh

I am a teacher and was quoted about £68 a month on an increasing level with Friends Provident. I have been looking into quotes on comparison sites and have found other quotes between £16-30 a month. Do I need income protection?

The first thing is that the Friends Prov plan is not a PPI but a PHI. The versions on the quote comparison sites are not PHI but PPI. So, you are not comparing like for like. A teacher probably has no need for PPI but PHI would be far more suitable.

Is my mortgage advisor swindling me with the income protection quote?

The mortgage adviser using PHI will be factoring the timescales to tie in with sick pay. The PPI on the website will probably never have to pay out a penny because of your sick pay. So, do you want to pay £16-£30 for something that will never pay out or £68 for something that does? If you think £68 is a lot then tell your adviser that you wish to compromise the cover by paying less.

Annisele

Other than buildings insurance (which your mortgage lender will insist on), all the insurance you've mentioned are optional.

Insurance is an odd product in that generally you hope it turns out to be a waste of money - wasting money is usually far less unpleasant than suffering a claimable event.

Whether it is "worth" you having critical illness cover or PHI is something that only you can decide. Your adviser can tell you that the product exists, and how much it costs, but he can't decide whether it is worth it to you.

PPI on the other hand is almost certainly not worth it. As dunstonh says, given your occupation it's unlikely you'd ever be able to claim on it, so it would be utterly pointless.

brettlee

Hello
Income protection can secure your income and help you meet your living costs and repayments on your mortgage. It is often far cheaper to buy this type of payment protection insurance from the open market than direct from your bank or mortgage provider, but as policies to vary immensely we highly recommend speaking to an independent financial advisor.

kingstreet

brettlee wrote: »

Hello
Income protection can secure your income and help you meet your living costs and repayments on your mortgage. It is often far cheaper to buy this type of payment protection insurance from the open market than direct from your bank or mortgage provider, but as policies to vary immensely we highly recommend speaking to an independent financial advisor.

Assuming the OP will receive six months full pay, followed by six months half pay and is virtually guaranteed not to lose their job, I concur with the others that Accident, Sickness and Unemployment cover would be a complete waste of time and money.

Critical illness cover and Permanent Health Insurance should be considered. Hypertension may be a factor but it will affect both, not just the critical illness. Look at PHI with a "waiting period" of 52 weeks which will match the point your employer will stop paying you.

ACG

When you are doing IP quotes on the internet they may well be doing the quotes on the lowest class basis...to draw you in.

I know the with Friends Prov you will be on a class 3 basis (in most cases it goes 1-4 - 1 being admin, 4 being a builder or the like). Teachers are seen as a stressful job so they are given a class 3.

My personal opinion is that for the majority of people, IP is the best possible policy. If your unable to work, its all well and good having life cover but how you going to pay for it you cant work?
Stick with your advisor, he seems like a good one. Most will just try and sell you life and Critical illness because its the easy sell, but do compare prices you might be able to get it down. I would pay slightly more though with an advisor. You will have a point of contact should you need to claim, he will do the work for you. You also have the knowledge that should it be the wrong advice you can make a claim against the advisor.

Your advisor might have also done a "rated quote" where he/she tells the life company of any conditions with yourself/family and he may just be showing you a realistic quote rather than a standard one which you may not be eligable for.

theagent

Hello, have just read through this and I'm looking to find a good income protector provider. In brief I'm in full time employment, live on my own, late 30's in good health but wanting to cover my mortgage, rent (I'm in shared ownership apartment) bills etc to cover for approx £900 a month should anything happen in this uncertain working climate. It would need to be accident, sickness & unemployment as the company I work for doesn't pay sick pay. I have worked for this company for nearly 10 years so should redundancy ever happen I would be covered for a few months so wouldn't need to be back dated. I've searched comparison sites and I'm coming up with around £30 per month for a year term. I came across a company called exeterfamily.co.uk which seemed to good to be true at £22.49, and was wondering if anyone had heard of them and are they a recognized company? Appreciate any help on this....

kingstreet

I use ExeterFamily for income protection cover. It is the combination of Exeter Friendly Society and Pioneer the latter being the specialist income protection part of the business.

I particularly like the rating method which doesn't penalise based on occupation and in addition, doesn't charge smokers extra.

Are they offering unemployment cover now? I didn't think that was an option with them.

Richard_Tucker_2

I have been doing a fair bit of research on these policies as I have a mortgage and do not want to be exposed if I lose my job. What I have learnt is most insurers offer upto 50% of gross income (80% of net) or 150% of mortgage (also includes any secured loan payments or rents) and other essential outgoings. If the insurance is based on gross income - it is income protection and if it is based on the monthly outgoings, most insurers classify it as payment protection. The quotes for payment protection has always been 15-20% lower than income protection for the same benefit amount. If you research a bit as it is mentioned in another post here, you can find several providers who do not ask questions on smoking or occupation etc. I finally ended buying through Best Insurance, not saying it will work for you - but I was happy with their prices, advice and support.

kingstreet

Richard, you'll more than likely find payment protection pays for upto twelve months, possibly two years at the longest. Underwriting is at point of claim, not at point of sale, so you can find yourself getting a claim rejected for something you would have disclosed at the initial underwriting stage if there had been one.

Income protection tends to run for the term of the mortgage, or until retirement, so you can potentially claim for a much longer period if you get a long-term illness or disability. This cover is underwritten at point of sale, so you know there is less likelihood of claim rejection for things like non-disclosure if you tell them everything.

Those concerned about unemployment will sometimes combine unemployment cover with income protection, particularly if their employer benefits run for six to twelve months as income protection premiums can be drastically reduced with the use of a longer "waiting period" before payments start.

Plenty to choose from, but the usual care and attention to detail required.

dunstonh

I finally ended buying through Best Insurance

That would be of no benefit for the OP though as it indicates you have bought PPI or MPPI. The op doesnt need PPI or MPPI but need PHI instead. The exception could be MPPI that pays directly to the lender (as that avoids the 66% typical maximum). However, that would be of no benefit really as you are not covering the need. As you cant insure yourself for everything, there is little point paying for things you dont need at the expense of things you do.