Life Insurance or Critical Illness or Both?

xxmrksxx

Hi All,

Apologies in advance if this is the wrong forum.

We are just in the process of purchasing our first home and trying to obtain life insurance.

We've been advised to get both, however I'm noticing quotes with Critical Illness included are higher (understandably I'm assuming as most claims would be made under this)

What we want is cover for the mortgage £110,000 over 35 years with a £40000 payout on top to help, however we are unsure to have it as a fixed or over a decreased period?

We don't mind having it on a decreased term to cover the mortgage, however would still like to have the £40000 buffer. Can anyone make suggestions on what would be useful?

Bare in mind were both mid 20's non smokers and fit and healthy.

Thanks in advance.

weighty1_2

Basically, from the sounds of it, you want 2 elements of cover for different needs. The reducing mortgage cover to protect the repayment mortgage but the fixed £40k payout to provide that buffer?

That can easily be done and many providers allow multiple segments to be arranged under 1 plan and actually discount the overall cost due to administration savings.

Why not speak to an IFA? Based on your ages it might also be worthwhile considering a long term income protection plan with life cover instead of critical illness. These plans (Permanent Health Insurance - PHI - as they used to be known) tend to be easier to claim on than critical illness and can provide a potential claim payout far exceeding what would be affordable for most clients on a critical illness plan.

Don't know any IFA's.............try unbiased.co.uk

magpiecottage

weighty1 wrote: »

Based on your ages it might also be worthwhile considering a long term income protection plan with life cover instead of critical illness. These plans (Permanent Health Insurance - PHI - as they used to be known) tend to be easier to claim on than critical illness and can provide a potential claim payout far exceeding what would be affordable for most clients on a critical illness plan.

The big point with PHI is that if you are to ill to work it WILL pay out. It is not a "sexy" product because it only pays a (tax free) income rather than a big cash sum but at least you have something to live on.

With CI, you get nothing unless you are "lucky" enough to suffer one of the defined illnesses.

Because of this, it is far easier to defend a complaint that PHI was sold in preference to CI than the other way round.

ACG

I think both posts sum it up quite well.

A lot depends on your budget. Its worth looking at life, CI and PHI. Personally i tend to lean more towards the PHI for the majority of my clients, but everyone is different.