Allied Dunbar Lifestyle Plus Critical Illness Lifetime Protection

Laibach

I have a full life crtical illness protection policy with Allied Dunbar which provides a benefit of £114,000 on diagnosis of a critical illness or death, for a premium of £94 per month.

This has been sold to me on the basis that it will help with inheritance tax planning (one day...as I am only 35, but have had the plan for 3 years) in that it is guaranteed to pay out one day, in the event that I do not need to make an earlier claim and so either I or my family will one day recover more than the total of all the premiums (say £94 pm x 12 x 48 years, to age 80).

However, my friends are not convinced and I have been unable to find much by way of research as to the merits or otherwise of these types of policies. Any views would be much welcomed? Thanks

dunstonh

This has been sold to me on the basis that it will help with inheritance tax planning

Critical illness cover doesnt help with inheritance tax planning.

However, my friends are not convinced and I have been unable to find much by way of research as to the merits or otherwise of these types of policies.

The merits of critical illness cover are strong but Allied dunbar will be damned expensive. At 35 you are beginning to enter the period when critical illnesses are more common but the reason for IHT planning seems a bit strange.

Laibach

Thanks - I agree, it is well worth having critical illness cover but when I have had quotes for similar amounts of cover, but just to retirement age, the premiums are considerably less. With this, while it is expensive now, and I suspect will become considerably more expensive in the future, at least (if I keep it till I die) it will pay out one day. What I am concerned about is whether with inflation it is really worth keeping (£114,000 in say 35 - 40 years wont be worth much) and should I, at age 35, really care about IHT, or should I just cancel this and go for a straightforward critical illness policy to 65-ish, at probably half the cost?

dunstonh

We dont know enough about the AD policy to say for sure but my gut feeling would be that you could do better with a modern plan.