Income Protection Plans

dunstonh

The_Jester wrote: »

My friends know the difference between PPI and PHI.

And yet they slag off PHI?

As I said, PPI is fair game. Yet PHI is rarely considered bad (caveat: apart from some budget plans which strip too much out and add too many clauses).

ACG

Phil - the reason is that your wrong in what your saying. Car insurance and buildings insurance are requirements in certain circumstances.

Everything else is open for debate. You saying he needs life insurance without knowing the OPs circumstances is totally wrong. If i sold life insurance to a 20 year old lad with no financial dependents i would be slaughtered by my compliance department. Just like if i sold buildings insurance to someone who rented.

Im invovled in the insurance industry and i also like to sleep at night knowing ive done a good job and will be recommended down the line. I often sell products which earn me less commission and are a harder sell when i could just go after the nice easy sale.

Life Insurance pays out more commission than PHI - but i would argue PHI comes higher up the list for the majority of people. Its a case of having discussions with customers and seeing what their point of view is.

Coming on an open forum and telling someone they need certain insurances and everything else is basically pointless is worse "advice" than doing nothing at all as they could potentially be paying for something they have no use for.

phill99

ACG wrote: »

Phil - the reason is that your wrong in what your saying. Car insurance and buildings insurance are requirements in certain circumstances.

Everything else is open for debate. You saying he needs life insurance without knowing the OPs circumstances is totally wrong. If i sold life insurance to a 20 year old lad with no financial dependents i would be slaughtered by my compliance department. Just like if i sold buildings insurance to someone who rented.

Im invovled in the insurance industry and i also like to sleep at night knowing ive done a good job and will be recommended down the line. I often sell products which earn me less commission and are a harder sell when i could just go after the nice easy sale.

Life Insurance pays out more commission than PHI - but i would argue PHI comes higher up the list for the majority of people. Its a case of having discussions with customers and seeing what their point of view is.

Coming on an open forum and telling someone they need certain insurances and everything else is basically pointless is worse "advice" than doing nothing at all as they could potentially be paying for something they have no use for.

I wasn't refering to the OP in particular.I was referring to most people in general. The 3 insurances I referred to where what most people would require. I had PHI for a number of years, but after investigation found it to be incredibly expensive and all the dice were rolling in a favour of the insurance company, particularly with the long led in time between claim and payment (3 months in the case of my policy by which time most illnesses are cured and you are back at work).

You say the average claim is 6 - 7 years. But that is only of the people who have it and claim. The vast Majority of us will never be in a position that we are debilitated to such an Extent. Sure we can all remember someone who has had cancer or some other terrible condition. But out of all the people that we know, those people are actually very few and far between, which is why they stick in our minds. I still maintain that it's a product that is promoted by the insurance industry for their benefit and they simply use scaremongering tactics to encourage us to buy it.

I also maintain that every person over 18 should have life cover, even if it's jut for £10000 simply so that their family are not burdened with funeral costs in the enfortunate even if their death.

The_Jester

As usual anything posted on a forum soon sinks into bickering.

I appreciate all comments and I agree with Phil that all people are entitled to an opinion but if you two want to bicker do it elsewhere please

ACG

Fair point, but there are ways to get the premium down.
You dont HAVE to insure the maximum you can get. On the govts scheme you can only claim if your unable to pass certain tests and then you only get £100ish a week. Personally i couldnt survive on £100 a week.
PHI pays out for the majority of people if you are unable to do your own occupation - so that could be typing, writing etc.

Personally i have covered myself for £1000 a month. Its not the maximum i can cover myself for, but its nice to know its there. Its definately affordable at less than £20 a month. So i know in any event i have enough money coming in to enable me to not have to move back with my mum or dad.

Just done a quick search to
54 per cent of claimants were assessed as Fit for Work (FFW) and are no longer eligible for Employment and Support Allowance. - http://research.dwp.gov.uk/asd/workingage/esa_wca/esa_wca_20120424.pdf

http://www.lv.com/lifeinsurance/incomeprotection/income_protection_tips_and_advice/claims-we-paid/

I agree, there is an element of scaremongering. There has to be. Nobody wants to discuss the situation really - but its somthing that needs discussing. If you want to cover it great, if not - fine.

But if it gets discussed and you know the potential outcomes of not being covered then you can make an informed decision.

I suppose we will never agree, but ive never done a hard sale in my life. Im far too soft to push it. But if people have the information they can then make their own decision.

Having worked for a life office though, ive seen the difference it makes when PHI does pay out.

jamesd

The_Jester wrote: »

He's trying to push an income protection plan for me which guarantees me £21,000 pa until I'm 65. It's costing £43 pm.

It's one of the most valuable insurance policies you can buy. Unable to work but have to live with it for life. There are a couple of things that you can do to reduce cost:

1. Use an "any job" instead of "own job" policy. This commits you to working in a call center or some low pay job if you can do that even though you can't do your normal job. Not really something I'd recommend for a lot of people but it is an option. It's cheaper because the policy will have to pay out less often. It's also got a lot more scope for arguments and unhappiness from customers who don't realise that they would be required to take any job at all that they can do before getting a payout. Own job is much nicer for a lot of people.

2. Use a lower amount of cover. Do you really need £21,000 a year or would £15,000 a year pay you enough?

weighty1_2

phill99 wrote: »

I wasn't refering to the OP in particular.I was referring to most people in general. The 3 insurances I referred to where what most people would require. I had PHI for a number of years, but after investigation found it to be incredibly expensive and all the dice were rolling in a favour of the insurance company, particularly with the long led in time between claim and payment (3 months in the case of my policy by which time most illnesses are cured and you are back at work).

You say the average claim is 6 - 7 years. But that is only of the people who have it and claim. The vast Majority of us will never be in a position that we are debilitated to such an Extent. Sure we can all remember someone who has had cancer or some other terrible condition. But out of all the people that we know, those people are actually very few and far between, which is why they stick in our minds. I still maintain that it's a product that is promoted by the insurance industry for their benefit and they simply use scaremongering tactics to encourage us to buy it.

I also maintain that every person over 18 should have life cover, even if it's jut for £10000 simply so that their family are not burdened with funeral costs in the enfortunate even if their death.

I'm with ACG and would disagree strongly with what you say. Firstly, if someone has life insurance how do they pay for it if they are long term incapacitated and have no, or minimal, income? (Ok, waiver of premium can be attached, but in reality this is a form of income protection albeit only for the premium amount)

You think that everyone should have at least some life cover when in effect the chances of death before retirement age is far smaller than the chance of long term ill-health. This simply does not follow logic when you state income protection is weighted in the favour of the insurance companies.

What evidence have you got to show that most illnesses are cured within 3-months? None I suspect, and if that was the case then why is the average length of a claim 7-years and why are there so many people claiming long term incapacity benefit? (they can't all be workshy lead swingers!) Your plan kicked in after 3-months, was this because you received 3-months sick pay benefit from your employer? I've just set a policy up for a client which has a day 1 deferred period. Yeah, it's not cheap but then again, he cannot earn back the money lost if he is unable to work.

Maybe the reason why you think people who are long term incapacitated are few and far between is because you simply do not see them. They aren't out socializing and telling people their financial woes because they cannot afford to, or aren't well enough to be doing so, not because they do not exist.

weighty1_2

The_Jester wrote: »

I've recently been re-evaluating my insurance plans with an independent financial advisor.

He's trying to push an income protection plan for me which guarantees me £21,000 pa until I'm 65. It's costing £43 pm.

As like most of you I'm quite sceptical of these advisors as many (not all) only want the commission.

I've spoken to several of my friends who have or have had them and all of them tell me they are a complate con. One of them has been fighting for a claim for two years.

What is everyone's general opinion of them?

As has previously been mentioned there are ways of reducing the cost such as reducing the income level. One way of reducing the cost quite significantly is reducing the cessation point of the plan. The cost of a plan expiring at 60 could be 1/3 less than one ending at 65. Also, depending on the deferred period, could this be extended? You may for example, only get 2-months sick pay, but if the proceeds were designed to only start paying out after 6-months this may reduce the cost by another £5/month.

Ultimately, some cover is better than none so why not tell the adviser what you want to pay and let him come up with a solution which is within your budget.

Finally, as has also been mentioned before, your adviser would definitely earn more from a life and critical illness plan with the same premium than a PHI plan, so I doubt he is recommending it because he is commission hungry.