Which Critical Illness/Income protection should I go with?

stephlt2000

I am a single 36 year old looking to buy my first home. I currently have no critical illness cover, income protection or anything of this sort. I have tried to read up about which ones to go for but it is seriously complicated. I have no dependents so I am not looking for something that will pay out when I die, but I do need to know that I will be ok financially should I not be able to work anymore. I am thinking more along the lines if long term cover than something that just pays out for 12 months or so. Can anyone please give me some advise? Thanks

InsideInsurance

Best advice is to speak to an IFA or a Protection Broker

Critical Illness and Permanent Health Insurance are very different beasts. One gives you a lump sum if you get one of a defined list of conditions all of which are generally "life changing". The other gives you an income up until your defined age (normally 65) if you are unfit to work due to sickness or injury.

Purely personally, I see PHI as more important because it could give me a salary for 30 years where as Critical Illness may pay off my mortgage and relieve that stress but it isnt going to be enough to live on for 30 years.

stephlt2000

Thanks for the reply. Is Permanent Health Insurance the same as Income protection? I am leaning towards a continuous income rather than a lump sum but can see advantages to both.

dunstonh

Is Permanent Health Insurance the same as Income protection?

Permanent Health Insurance is proper income protection. It is medically underwritten at point of sale, cannot be cancelled by the insurer (hence the permanent) and covers you to your chosen end age (typically retirement).

income protection has become a bit of a mis-used name by some PPi companies to try and market their products against better quality PHI. Possibly due to the way quote comparison sites sell their products. Most of those sell PPI versions of income protection and not PHI versions.

InsideInsurance

stephlt2000 wrote: »

Is Permanent Health Insurance the same as Income protection?

Similar to the above, it is a type of Income Protection and is the full fat version.

You also get Accident Sickness and Unemployment (ASU) which is basically what PPI is/ was. Two key differences are that its normally a maximum of 12 months payment (or some 24 months) and checking your eligibility is only done at point of claim and so you can find that you dont have cover at the point that you actually need it.

Some more "modern" advisors will tell you only PHI is Income Protection, it is really personal preference but I'd say both are, PHI is full version and ASU is the budget/ light version