Friend paying £180p.m for Critical Illness cover?

bob_dob

Hi, after reading an article in March's Observer about how Critical Illness cover is often full of medical loop holes that insurers can exploit to not pay i told my friend to check his. He told me that he pays £180 p.month for him+his 48yr old wife(a smoker) to cover his mortgage with 'Bright Grey' that he took through his bank. Surely this is too much?

poppy_f1

the smoking wont help also critical illness gets more expensive the older you when you take it out and there may also be pre existing medical conditions or risk of serious conditions which would push the premium up
also life cover may also be included

bob_dob

Thanks for that.
There are no pre-existing medical conditions.
But surely, on the whole, £180 per month is a lot?
I was under the impression that, generally, critical illness cover taken 'from' (via) a bank is always pricey?

dunstonh

But surely, on the whole, £180 per month is a lot?

Impossible to say without knowing the facts. I have done lower and higher premiums.

Banks are the most expensive distribution channel. The premiums on policies through them are often 25-40% higher than an IFA. So, there probably is some scope for reduction.

reading an article in March's Observer about how Critical Illness cover is often full of medical loop holes that insurers can exploit to not pay

Thats the myth and there was some truth in that 5 years ago or later. However, nowadays claims payout rates in the 90% range with most providers.

bob_dob

Thank you for that, great advice as usual!
Regarding the article- Matt Morris of specialist advisor Lifesearch "Critical illness is a minefield. There are up to 20 players in the market with many policies sold by mortgage brokers who are more interested in home loans. Due dilligence can be difficult as advisers have to adsorb so much information and then communicate it'.

bob_dob

'Take 'forced ejection fraction', used in measuring heart problems. Some quote 35%, others 40%. Which is more generous? How much difference is there? How can an average person/adviser know? In fact, the lower figure is substantially more serious, so the 35% policy is harder to claim on'.

ACG

Most Critical Illness policies cover in the region of 30-40 conditions. Most claims are on 5 conditions - Heart Attack, Cancer, Childrens cover (i was quite surprised at that) and 2 others which i cant remember off the top of my head.

The others are there to beef up the contract and obviously claims do get made on them. As Dunstonh said though, most decent life companies payout abover 90% of claims (maybe closer to 93-95%). Thats not bad really, it would be higher if all clients/financial advisors were totall honest and ensured they gave the correct info.

Bright Grey are a big name so i wouldnt worry about the company they are insured with.
As for the premium, it could well come down but as they are a few years older it could also go up. There is no harm in reviewing the cover periodically. The bank should be doing this and getting your friends in every year or 2 anyway.

bob_dob

Thank you too for that very interesting+helpful advice.
I was quite interested in Dunstonh's quote of banks policies usually costing 25% to 40% more, what would you advise my friend do- visit an IFA? (Im guessing that a comparison site is much much to vague to consider?)

pedro123456

"Hi, after reading an article in March's Observer about how Critical Illness cover is often full of medical loop holes that insurers can exploit to not pay"

That sounds about right Bob, well done the observer :T:T:T

A myth? :rotfl::rotfl: ..............nada, its no myth

lisyloo

Please educate me here.
Intuitively I have always wanted to protect my income if I cannot work, whether that's an accident, illness or whatever, the criteria being unable to do my job through a health related problem.
So I can fully understand the use of PHI.

Critical illness only cover some illnesses, the detail of which can be hard for lay people to understand.
I would want to be covered if I cannot work, not only in some medical circumstances.

Furthermore I need to protect my income, possibly for a long time if I am long term sick.

Now I can see that a lump sum might be nice for treatment, care, stair lift, car, last holiday etc. but surely that comes after you've protected the income that you live on.
But why would CI be more popular than PHI.
This seems to me to be because it's what advisors sell.

Shouldn't we all be protecting our income first and then the other nicecities after?

Or am I missing something?
I am quite open to that possibility so please educate me.

bob_dob

Hi lisyloo,
I have the same dillema but perhaps it would be better for you if you started a thread of your own as id prefer this thread not to go off on a tangent away from my query if that's ok? Thanks.