Life Insurance, Accident & Sickness Insurance Questions

toby_puppy

Hello

I am 41 years old and have currently got a critical illness policy - decreasing term in line with my mortgage. I looked through it and realised there is no death benefit on it and I am paying £17 per month. Also a lot of the conditions are exempt, ie. cancer if it's localised etc etc.

I am thinking of getting rid of this cover and taking out life cover instead. I have 20 years left on the mortgage and the balance owing is around 53k.

Looked at some premiums but didn't know if I should go for decreasing, level cover, or lifetimecover.

Basically I want to know that if I die between now and 20 years that the mortgage would be paid off, but I also wanted to leave a bit extra, say another £10k towards funeral costs etc.

What would be the best option to go for?

Also are the accident/sickness/unemployment covers worth having? My mortgage is £350 per month and I got quoted £15 per month to cover that for 12 months payout.

ACG

I personally prefer income protection (sometimes known as PHI) it pays out if you cant work due to illness until either the plan ends or your retirement age or you are able to return to work - whichever is sooner - its not limited to 12 months. Although it doesnt pay out for unemployment cover usually.

If your not sure what to take out, its worth having a chat with a mortgage or financial advisor. They can make a recommendation. It usually doesnt cost you in the sense you pay a fee, they will get commission from the provider. There are a lot of options available so it could be handy to know your getting what you want.

dunstonh

Statistically, you are more likely to claim on a CI policy than a life policy. Most advisers will tell you that they see more claims on a CI policy than the life assurnace side. However, the consequences of not having life assurance when there is a financial need for it can be higher than those of not having CI.

Like ACG, I would put PHI above PPI every time possible.

Brett.pl

Too bad to hear that. Maybe you should pray also. And don't forget to check this, Prudential life.

toby_puppy

hello,

thanks for the advice.

i just got some quotes for Income Protection Insurance, some of them had guaranteed rates - I assume that means the premium wouldn't increase?

I put in that I would require £500 per month until age 65 (if I was injured/ill and unable to work). Premium around £25 per month.

However, it wasn't clear if the amount of £500 would rise over the term. ie. if something happened next week, then £500 would be a big help, but in ten years time the value would be eroded. Do these policies normally stay in line with inflation?

Would this be a good alternative to the Critical Illness cover - ie. the critical illness would pay off the mortgage if I got a major illness but if I had the Income Protection insurance then the income from that would cover the mortgage repayment anway.

It just seems that the critical illness cover is a bit restricted on what it will pay out on but the income protection insurance looks like it might be more flexible?

I thought maybe a Level Term Life Insurance policy, something to pay out a lump sum to family if I died and an Income Protection Insurance policy and scrap the critical illness cover???