Buying new home - critical illness cover

edp33

I'm in the process of buying a new home with my partner, unfortunately she is out of work at present so it is even more important that she will be ok financially if anything should happen to me.

For work I get a death in service benefit of 3 x my salary, which comes to around £120,000.

The mortgage will be £132,000

Because money is tight at the moment, if I go for life insurance with critical illness cover of £40K that is around £17 a month (over 30 years, duration of mortgage) and in the event of my death with death in service benefit would pay of the mortgage with some money left over. If I get a critical illness, this would cover my salary for a year, does that sound a sensible approach?

The only other option I can see is to go with Aviva life insurance which includes terminal illness cover and is cheaper.

Other info
My company may provide up to 6 months sick pay depending on the circumstances, My partner has an existing life insurance policy with critical cover for £60K.

Thanks in advance

ACG

Nobody can really advise on these forums without seeing all of your financial info.

However, it may be worth looking at PHI/Income Protection. What would happen after 6 months if you were to become ill. It seems like you have looked at it if you were to die or have a heart attack/cancer etc. But what about if you were to have an accident that put yo out of work for 2-3 years? or longer.

just another spanner in the works to think about.

This is a self plug but this has info on some of the different insurances available http://manchestermortgagebroker.co.uk/blog.php

magpiecottage

I agree with ACG.

Critical illness is great if you are "lucky" enough to get the right illness but get the wrong one (or just the right one but not badly enough) and you get nothing.

ponymad_3

IPP is usually the right option, but without your full details as said no one can really advise properly. But we can add food for thought. You can take out IPP deferred so it starts when your employers sickness benefit ends.. this will be recommended as the corrrect option. Often CI , which usually has life cover included for no additional cost is cheaper. But the potential payout for IPP is much higher . It is taken to protect your income and can have inflation increases built in. Potentially it can pay you until a chosen retirement age from the date you finish working. The CI cover will only ever payout the lump sum you choose, you can also have an increasing inflation option.
The CI can also be taken on a decreasing basis if you choose a repayment mortgage, in which case it will potentially repay your debt in the event of specified illnesses.

The other thing about CI is that the underwriting is more genrous and if you already have a health condition it can exclude claims in certain situations. This is not ususally done in IPP policies so declines on underwriting are more likely, as they cover total permanent disability for ex like a bad back.

Hope this gives you a little more background.