Life Insurance Help

jennyokay

Hi there,

I am a bit confused about life insurance. I currently have critical illness and life cover, but want to change this. I was thinking I might change my current cover to level term life assurance to pay my mortgage and settle a lump sum on my dependants in the case of my death.

In my job I now have PHI which kicks in after a 26 week waiting period. Should I get some income protection insurance that covers me until the PHI starts to pay out in case of critical illness or accident? What do people normally do about this waiting period?

My work would pay me full pay for the first 30 days of sickness, but that would leave 5 months or so for which I would have no income but statutory sick pay.

Not sure what to do, but I have a child and his SAHD to worry about if my income was stopped!

Thanks in advance for any advice.

ACG

If you have income protection that kicks in then you might be best just saving up a lump sum to carry you through for those 5 months.

You have a few things your trying to look into, my suggestion would be to speak to a mortgage or financial advisor.

dunstonh

I was thinking I might change my current cover to level term life assurance to pay my mortgage and settle a lump sum on my dependants in the case of my death.

So two needs requiring two polices or two segments if you use a multi-segment plan. (possibly three or four if you have a spouse/partner with uneven needs)

Should I get some income protection insurance that covers me until the PHI starts to pay out in case of critical illness or accident?

PHI does not provide critical illness cover. PHI is replacement income. Critical illness provides a lump sum. Personal savings should cover the first 6 months. No income protection plan will cover such a short period.

jambot41

jennyokay wrote: »

I currently have critical illness and life cover, but want to change this.

Can I ask why you want/need to change it?

Speaking to an adviser would be a good idea though. Couple of recommended firms on the website already.

Be good to ask more long term questions too I guess so that you would be ok in retirement etc.

dunstonh

Speaking to an adviser would be a good idea though. Couple of recommended firms on the website already.

This site doesnt promote the use of any specific IFA firm. it leaves individuals to choose (mainly as most IFA firms are small local firms and couldnt handle the influx of enquires that this site would generate. The site only mentions execution only firms which do not give advice but will do what you tell them to do.

jennyokay

Thanks for all your help. I was thinking of getting rid of my critical illness insurance because I wanted to get insurance that would pay out a lump sum if I died, and because this site says that critical illness insurance is questionable in that it doesnt always pay out. Now I think maybe I should have both!

dunstonh

because this site says that critical illness insurance is questionable in that it doesnt always pay out.

This site is wrong in a number of articles it publishes and gives no consumer protection for anyone acting on the advice of the articles. It is a dangerous article and sooner or later I would expect someone who suffers a claimable event but cancelled the policy on Martin's "advice" to go to the press and blame him.

The providers pay out on over 90% of critical illness claims. Indeed, the claims rate is not too dissimilar to life assurance (the reasons for rejection are very similar too). Depending on your age, you are statistically more likely to suffer a claimable event on a CI policy than a life policy.

lisyloo

this site says that critical illness insurance is questionable in that it doesnt always pay out

I am not sure what you are referring to, but you should certainly be aware that critical illness cover only covers a specified set of illnesses. It does not cover all illnesses.
PHI pays an income if you can't work, whereas CI pays a lump sum for certain illnesses only.
PHI is suitable for replacing an income long term.
CI is suitable for short term funds, care, treatment, last wishes, house alterations, but would not usually be suitable for a long term income.