First Time Buyers - confused about insurances

Worried

Hi, OH and have been to see IFA to discuss insurances. We are confused. He gave us a quote for joint level term life. Joint critical illness and life cover - decreasing. Also redundancy cover and income protection. We are confused as to what we need. I work in public sector, so would get a fairly good redundancy package, so would give me time to find a job. Also get good sick pay. OH is unsure about his benefits, but is checking. I don't think I fully understand what income protection is. Can anyone explain?

What insurances should we consider? Buildings and contents I understand and realise we need. I was thinking of getting the life and critical illness, but not the income protection (depending on if it covers what I think it covers) and not the redundancy. We are an unmarried couple in late 20's, early 30's with no children. Any advice greatly appreciated.

olly300

I'm in a similar situation so this is what I have found out:

Income protection can pay a percentage of your income normally enough to cover loans including your mortgage if you are unemployed, sick so can't work or made redundant.

The cover can either be for a term (http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1076369501,83567,) i.e. 12 months called MPPI, or until you retire. Until you retire is more expensive.

As you are in public service find out how long your sick pay lasts for an ensure that your income protection policy kicks in after that gap.

If you don't need the redundancy part i.e. as you are self-employed or work in a public service where you are highly likely not to be made redundant, you can ensure your cover doesn't include this.

Also check the small print some don't cover you if you are sick and can work again in any profession, while others will cover you if you can't work again in your specified profession.

Critical illness only pays out if you get one of the long list of illness on the policy. If you have had any condition that can be linked to the condition claimed for or have a parent/sibling who has certain conditions then it won't pay out at all if you have stated this on the claim form. Plus if you get a condition that isn't on the long list then it won't pay out.

Life cover[Only you can decide if you need this as you have no dependants. Live cover is apparently cheap at the moment which is why the IFA is pushing it on you.

Redundancy CoverYou can get this with income protection if you need it.

You should also :
1. Check what other payments you have i.e. death in service benefits that may help pay off your share of the mortgage. However you need to ensure that you request that your partner gets all the benefit by completing a new form. If you haven't completed it the payment will go to your parents and full siblings.
2. Both write a wills making it clear the other gets the property if you die. If you are in a trade union they can do this cheaper for you both.

Hope this helps.

redman20uk

If you have no children and no plans to have any, why not do income protection and life cover first. The income protection plan then pays you an income if you suffer a sickness and allows you to pay all your regular bills (including premiums to all your other insurances, savings and pensions). see

http://uk.standardlife.com/content/lifeinsurance/family/income/ipp.html?source=portal

for an example.

They also do a fixed term plan which ends at the same time as your mortgage - it doesn't have to go to your retirement age. Don't confuse income protection with MPPI - they are different. MPPI has been getting a bit of a roasting from the consumer groups because it's expensive and often doesn't pay out.

Why take a joint life life cover plan? - take two (ie one each) - that way the other policy continues if one of you dies. And life cover hasn't been so cheap for a long time.

Critical illness is a bit of a gamble but you can add it to the life plans at low cost - that means that the plan will pay out either if you die or suffer a critical illness. Plans which provide only critical illness are very expensive.

lotta_2

Hiya!
I am one the first-buyers and also getting increasingly confused about what type of insurance I will need. I am 36, single, healthy and working in the NHS. So my question is: Will it be enough to take out a MPPI??
I'm sorry if I asked questions again which have been asked before but would really appreciate some advice!
Thanks a lot!!
Lotta x