Opinions on insurances

HarriettPotter

Hi all

I wondered if people have an opinion on 'income protection' or 'critical illness' insurances.

I have neither although I do have life insurance along with buildings and contents for the property I own. I had critical illness cover for a year but only because it came free with my mortgage!

I am currently helping Mr HP look at his monthly outgoings and he is currently paying life insurance, buildings and contents insurance, plus critical illness and income protection.

I am cynical and I don't like to buy into insurances that I don't feel are necessary. I have never even heard of 'income protection'.

I am arguing that if he really wants to reduce his debt and budget he needs to look at areas to pull in his belt. Is it feasible to suggest that these insurances could be cancelled?

Be grateful for opinions. I realise that this might be purely about personal choice but I am very sceptical about misselling of insurances etc...

HP

dunstonh

Income protection in its correct name is "permanent health insurance" (PHI). If he is unable to work due to illness or disability, then after a qualifying period, the insurer will pay an income until the final date (usually retirement age) or when he can go back to work.

It's quite popular with self employed individuals whose business relies on them being fit and able and who get limited state help if something did happen as they are self employed. It is also useful for those that dont get much benefit from their employer.

In the pecking order of insurances, PHI comes second after life assurance as a need.

Critical illness (typically comes third in pecking order) is a matter of opinion. 1 in 6 will suffer a claimable critical illness before the age of 65. Thats compared to 1 in 5 with life cover. So the claims ratio potential isnt much different. From a professional point of view, I find more people claiming on CI nowadays than life cover.

I also find that people purchasing standalone CI cover tend to have experienced an "event" with a friend or family member and realise the problems that not being insured can cause.

Like any insurance, you only notice the benefits of it if you have a claimable event. If you have the policy, you are grateful, if you don't you suffer.

but I am very sceptical about misselling of insurances etc...

Its virtually impossible to mis-sell critical illness or PHI cover as they are both medically underwritten to your circumstances and everyone has a need for them. They are not like ASU/MPPI or PPI policies which are not underwritten to your circumstances.

HarriettPotter

Thanks that is great advice