Income protection/Critical illness..

HoneyAndLemon

OH and I went to the bank today to sort out income protection and critical illness cover.

We asked everything we thought of, apart from obvious one that only came to us after we'd left. Can we cancel the policies if we lose our jobs? Or even if one of us loses our job?

We each got our own policies, although they're covered by one direct debit.

The documents we have so far just outline prices etc, nothing about cancelling (except the cooling off period just).

dunstonh

OH and I went to the bank today to sort out income protection and critical illness cover.

Not a good idea. Banks are typically the most expensive distribution channel (even when using brand name insurers) and somtimes the products they have are the more basic ones or even cut down versions of the IFA version.

Your next stop should be to see an IFA who you should have seen in the first place.

Can we cancel the policies if we lose our jobs? Or even if one of us loses our job?

yes

HoneyAndLemon

dunstonh wrote: »

Not a good idea. Banks are typically the most expensive distribution channel (even when using brand name insurers) and somtimes the products they have are the more basic ones or even cut down versions of the IFA version.

Your next stop should be to see an IFA who you should have seen in the first place.


yes

We both got our own critical illness policies that will pay out £50k if we get any of 23 different illnesses, over the next 40 years.It also came with free life cover. And we got Essential Earnings Cover (income protection), that will pay out just over half our months salary, for a total of 60 months (e.g we can claim for 12 months one time, and still have 48 claims left), when we stop getting paid sick pay by our employers.

So we got 4 different policies for a total of £65 a month. Does that sound reasonable?

OshayAway

HoneyAndLemon wrote: »

We both got our own critical illness policies that will pay out £50k if we get any of 23 different illnesses, over the next 40 years.It also came with free life cover. And we got Essential Earnings Cover (income protection), that will pay out just over half our months salary, for a total of 60 months (e.g we can claim for 12 months one time, and still have 48 claims left), when we stop getting paid sick pay by our employers.

So we got 4 different policies for a total of £65 a month. Does that sound reasonable?

Far, far more comprehensive plans out there at a lower cost. Most plans via IFAs / brokers cover 40+ conditions and rated 5 star by defaqto. Banks are limited to their own 'poor' plan (often only 2 star) and expensive.

kingstreet

The cost difference between stand alone critical illness cover and life & critical illness cover together is negligible, so the "free life cover" line you've been sold was a pure sales tactic.

The top of the range life & critical illness plans typically cover around 40 illnesses and offer lower payouts for some low-grade bouts of illness, which would get no payout from some providers.

If you've taken separate cover, the plans should have been written in trust, to ensure the life cover can be paid quickly, without the need for a will or probate and outside the policyholder's estate for inheritance tax purposes.

Finally, income protection. The best plans will pay out from the point you are unable to do your own job due to illness or disability, right through to the end of the policy term. How can you possibly know your claim will be over in five years? :eek:

We call inability to do your own job an "own occupation" definition while cheaper plans often use "any occupation" or "work tasks" definition which means you may miss out on a payment of benefit because they think you would be able to do another job, not just your own. What definition does your plan use?

As dunston said, you are probably paying through the nose for sub-standard cover which may be more difficult to claim on than a cheaper but better quality alternative.

Link to defaqto ratings for critical illness cover.

http://star-ratings.defaqto.com/critical-illness-Insurance?ProductTypeView=StarRatingsCenter_CriticalIllness_LevelTerm_ProductDetails

Look for your bank's plan and compare it to the best! You can do the same for the Income Protection too.

http://star-ratings.defaqto.com/income-protection?ProductTypeView=StarRatingsCenter_PaymentProtection_IncomeProtection_ProductDetails

dunstonh

HoneyAndLemon wrote: »

We both got our own critical illness policies that will pay out £50k if we get any of 23 different illnesses, over the next 40 years.It also came with free life cover. And we got Essential Earnings Cover (income protection), that will pay out just over half our months salary, for a total of 60 months (e.g we can claim for 12 months one time, and still have 48 claims left), when we stop getting paid sick pay by our employers.

So we got 4 different policies for a total of £65 a month. Does that sound reasonable?

You have been sold to by a salesperson.

The life assurance cost when bolted on to a critical illness plan is typically only pence to a few pounds different. It is not free.

The name of the product for income protection suggests a budget option. The fact it only pays out for 5 years verifies that when proper income protection pays out until retirement or selected age.

All sounds pretty poor to be honest and expensive for what you have. Budget plans at comprehensive level pricing.

ACG

I fully agree with the others.

What you have been sold/bought are products that proper advisors probably wouldnt touch for the majority of clients.

When we sell products we have to get it past our compliance department and most would question why we had sold a short term income protection plan rather than PHI. Banks are different because they only sell a limited number of products so its easier for them to get it past their compliance department.

Speak to a Mortgage or Financial advisor - i would put money on them saving you money and at the same time getting you a much more comprehensive contract.

HoneyAndLemon

Flip. I dont know what to do. Im sure we can still cancel at this stage then. We live in Northern Ireland, how do we find an IFA?

weighty1_2

HoneyAndLemon wrote: »

Flip. I dont know what to do. Im sure we can still cancel at this stage then. We live in Northern Ireland, how do we find an IFA?

You should be able to cancel at any stage without any penalty. No bank that I am aware of would get you to sign a client fee agreement for cancelled policies.

You can find an IFA using unbiased.co.uk or maybe ask friends/family members as a personal recommendation can be even better than blindly choosing one online.

I completely agree with everything that has been said. A critical illness policy which covers 23 conditions is pretty sub-standard these days and an income protection plan which only covers a combined period of 5yrs worth of claims is even worse in my opinion.

If you have been off work 5-years due to ill-health, let's face it, you're unlikely to ever return to work. You'd be much better off with a plan which covers you until retirement.

kingstreet

The plans go into force once medical underwriting has taken place. At that point, you will be sent contract details which include statutory cancellation notices, permitting cancellation within thirty days, with no charge.

Find your IFA and seek proper advice, cancelling the bank products in the statutory cooling-off period.

HoneyAndLemon

Okay can someone explain what I should be looking for?

Im quite happy with the Essential Earnings Cover they've quoted, it worked out around £10 a month for both of us. Paying just over 50% of our salary for a total of 60 months. I can't find any other income protection policies that are any cheaper/longer..

However, the critical illness does seem quite expensive. Its around £60 a month for both of us, paying out £50k, the cover is for 40 years. Where should I go to find better than this? I dont really have time to see an IFA, so companies I can phone/get quotes online for would be really helpful...