Life Insurance & Unemployment Protection

rodders470

Hi All

I'm finding life insurance very confusing and I was hoping someone could help.

I'm buying a new house and need to take out life insurance with crirital illness cover.

Would you recommend decreasing cover or having a set level?

Also, I need to take out unemployment protection, so i can still pay my mortgage if I am made redundent. Do any life insurance policies include this?

Many thanks

magpiecottage

rodders470 wrote: »

I'm buying a new house and need to take out life insurance with crirital illness cover.

Why do you need life cover - do you have anybody who will need to live in your house afterwards if you die?

Also, if you choose Critical Illness cover (which has its uses) what happens if you are unable to work through a long term illness which it doesn't cover? Would it be better to have a policy that pays off the mortgage or one that enables you to meet the monthly payments and other living expenses, or both?

Would you recommend decreasing cover or having a set level?

We don't know enough about you to make a valid recommendation.

Also, I need to take out unemployment protection, so i can still pay my mortgage if I am made redundent. Do any life insurance policies include this?

This type of cover is valuable but not normally included in a life policy.[/QUOTE]

The one thing I can recommend is that you see an INDEPENDENT Financial Adviser, who is able to offer the most appropriate product(s) from the whole financial services market.

Make sure you are provided with an initial document which confirms this before going any further.

ACG

With regards to life cover - the usual thing to do is to get a Decreasing Policy if you have a repayment mortgage, or a level term policy if you have an interest only mortgage. Thats the usual, it doesnt mean it is right for you.

As magpie has said, if you do not have a partner or kids...do you really need life insurance? If you die - are you wanting someone else to be able to pay off the mortgage and live there?

Critical Illness, can be a good thing to have but i would usually prefer to spend the money on Income Protection rather than Critical Illness.

I would recommend you see a mortgage or financial advisor as (i dont mean this in a bad way) it seems you dont understand the pros and cons of whats out there. Its not worth getting it wrong.

An advisor gets paid by commission so you it may cost you £1 more per month but at least you know its right.

rodders470

Hi

Yes I have a partner but no kids yet. If something happened to me I would want the insurance to pay the mortgage off.

What is the difference between critical illness and income protection? I assume these both of these don't cover unemployment due to redundancy?

Thanks

dunstonh

What is the difference between critical illness and income protection?

One pays out a lump sum on diagnosis of a range of specified critical illnesses. The other will depend on the type of income protection but in general it would pay an income after a waiting period for a period of time (dependent on the policy) if you are ill.

I assume these both of these don't cover unemployment due to redundancy?

The best types don't, no. However, a few permanent health insurance plans (PHI)allow it as an add on. Or you can get it as a standalone plan or you can mix and match a PHI poicy with a PPI policy that does have unemployment cover but lesser accident and sickness protection.

ACG

Critical Illness is a lump sum payment on diagnosis of one of the 35 or so conditions covered.
Income Protection pays out around 65% of your income on a monthly basis whilst you are unable to work - This could potentially be up until your retirement age.

Unemployment cover is a different contract, that will pay out for a maximum of 12 or 24 months.

Chances are you wont be able to afford:
Live Cover,
Critical Illness,
Income Protection and
Unemployment cover.

You may just need to decide which are the most important.

socks_uk

I'm pleased I've come across your posts as me and my husband are looking for some sort of financial insurance 'just in case' either of us can't work in the future. We've been told about Nationwide Lifestyle Protector and now we have the leaflet we are searching the net to see what other options we have.
We already have life insurance which was sorted out by our independent financial advisor and after reading the advice above I'm not sure why we didn't think about making an appointment to see him again. I've tried to do a search for PPI but just end up finding posts from people trying to claim back from the banks!
Thanks all.

dunstonh

We've been told about Nationwide Lifestyle Protector and now we have the leaflet we are searching the net to see what other options we have.

Not heard of that product. Is it from the Nationwide b/society?

The internet has virtually no coverage of the main type of income protection. Most sites retail payment protection rather than income protection although confusingly, many of those payment protections refer to themselves as income protection. The main type of income protection is permanent health insurance (PHI) and is mainly retailed via IFAs.

PHI trumps PPI in most cases. Although sometimes having both is the best option.

socks_uk

Yes, it's from the Nationwide Building Society.
We've no reason to think either of us will lose our jobs but nobody knows what's around the corner. We should be debt free in 7 years, in one way it sounds a long time but in reality I don't suppose it is.

ACG

I hadnt heard of it either but just had a look, this may help dunston.

Im not sure this would be best use of your money. Your paying for an element of life cover which you already have and it only pays out for 12 months. Might be worth running it buy your advisor.

dunstonh

The nationwide product is a PPI. So, its a budget option and has overlap with current needs.