No Protection in place: where to start?

planteria

i am 38. have no dependants. home owner (with mortgage). employee of a company i own. investing into ISA and Pension.

my portfolio: https://forums.moneysavingexpert.com/discussion/4698817

i have Car Insurance, of course. i have Buildings Insurance (part of Service Charge for apartment block). i have Contents Insurance with UIA.

but i have no other Protection products at all.

i am advised that i should have:

• Income Protection
• Life Insurance
• Critical Illness Cover

but do i? and where to start?

when i own the company, and on the last day of each month I wire my monthly salary to myself, along with wiring a couple of dividend payments each year and making a company pension contribution to my own pension funds...can i actually take out Income Protection? and should i?

Life Insurance i understand. If I were to die, a policy could clear my debts and leave a chunk to pass on to my relations...such as Niece and Nephew.

Critical Illness Cover would be useful if i was unable to work due to illness. The business i run has other people working and generating revenue, but i am co-ordinating things, so it would struggle if I was completely unable to work.

any thoughts or advice appreciated.

ACG

It all depends on your circumstances.

I posted this on another thread but it goes for your question too...

The way i like to think about it is:
- If either of you were to die, financially speaking what you want to happen and how much would you need for that.
- If either you had a critical illness (cancer etc) same question as above.
- If either of you were off work for a longer period than your sick pay would pay for, again same question as above.

You may be a single person but the questions are still the same.

If your unsure it might be worth having a chat with a broker and let them make some recommendations.

kingstreet

I'd say you are single, no dependents and have no need for life cover.

You should consider executive PHI (income protection). The firm can take this out and use it to replace your salary in the event of you being unable to work through illness or disability. The premiums would normally be a trading expense (check with HMRC!) as the benefit is treated as your salary and would continue to attract NI/Income Tax, unlike the personal PHI which is tax-free.

Critical illness cover to pay for adaptations to your home, or perhaps to repay your mortgage would be next option, but only you can properly prioritise your needs with the help of a professional advisor.

choppa21

Hi there,

My initial thoughts would be that Income Protection would be your first priority - the best way to structure it should be left to an adviser as there would be many options to consider, i.e personal policy or company funded scheme as mentioned. It would also be important to ensure that your dividend payments were covered too, most companies will do this providing it is being paid from the current years profits and not retained profit.

Although you say you have no dependants it sounds like the employees of your company might in reality be dependant on you. If you were to pass away how would that leave your company and the employees? As a director you have access to a Relevant life policy which can be paid through your business and attract tax relief making it very cost effective! This could then be used to employ someone to replace you or provide funs for your company to continue comfortably as you want it - this may be more of an issue for a Solicitor though.

Critical Illness also has its place and in most cases you will be able to include life cover in the policy for little of no extra cost. Critical Illness is more of a personal choice when you have no direct dependants though.

When thinking about personal life insurance your pension provisions need to be considered as this is usually a return of fund on death, which can be seen as life cover.

I hope this helps.

planteria

thank you very much for your replies.

i have not looked at this further until the last few days. i have had a chat with an advisor at a building society, who has produced some quotes for me using Friends Life, to whom they are tied. i have also met with HSBC, and have received an in-house quote from them, based upon £200k Life Insurance, £200k Critical Illness Cover and £1,250/m Income Protection. i have spoken to Halifax re. having a meeting. i have a booklet from them which relates to the Scottish Widows 'Protection for Life' plan. i do quite like the idea of the various elements coming under one policy.

i haven't looked at mutuals, and i wonder if there are any that would offer a competitive policy which covers all elements. i have friends who use DenGen, but that is just Income Protection.

any further thoughts would be appreciated.

also, on current form, i may land a dependent in the not too distant

kingstreet

Cover from banks and building societies is always "tied" always more expensive and in HSBC and Scottish Widows' case not as good qualify as you can get elsewhere - cheaper.

Please find an IFA and get impartial advice on the best cover at the best price and stop talking to tied agents.

DEFAQTO produces star ratings for products. Look at the ratings for HSBC Life and Scottish Widows' offerings;-

https://www.defaqto.com/star-ratings/critical-illness-cover

Scottish Widows - three stars. HSBC - not rated, so compare benefits carefully.

https://www.defaqto.com/star-ratings/income-protection

HSBC - IP, two stars, Scottish Widows three stars.

planteria

thanks kingstreet.
at least i have some quotes which I can compare:)

kingstreet

Typically, the same product via a bank or building society can be upto 40% more expensive than the same product from an IFA.

I'd be interested to see what your Friends Life quote is, compared to what an IFA could do.

Stick your quote details here and let one of us run it to see the difference. I'm curious. FL is one of the providers with a 5 star Defaqto rating for its CI/IP via its menu-protection plan, along with LV, L&G, Scot Prov, Bright Grey and a few others.

See what the cost/quality comparison is for those other providers too when you obtain quotes. Unlike some mortgage products, you don't get a better deal going direct.

planteria

ok kingstreet....all based on £15k/yr Income Protection, £200k Life Insurance and £200k Critical Illness Cover. 38. no medical conditions. non-smoker. all to age 65.

Income Protection
HSBC (HSBC Life): £47.46/month.
Halifax (Scottish Widows): £30.00/month (with a 13 week deferred period)
Friends Life (via WBBS): £26.62/month.

Life Insurance
HSBC (HSBC Life): £18.28/month.
Halifax (Scottish Widows): £123.00/month "Critical Illness and Life Cover".
Friends Life (via WBBS): £165.64/month. "Critical Illness with Life".

Critical Illness Cover
HSBC (HSBC Life): £62.64/month.
Halifax (Scottish Widows): £123.00/month "Critical Illness and Life Cover".
Friends Life (via WBBS): £165.64/month. "Critical Illness with Life"

planteria

From the 3 quotes I have it would look as though Income Protection from Friends Life with Life Insurance and Critical Illness Cover from HSBC would be my best value option.

seems strange that Friends Life are so competitive with the Income Protection but so much higher for Life Insurance and Critical Illness Cover.

ACG

I used to work for Friends Life (or Friends prov as it was before they merged with another company), they were always big on income protection.

Rather than going to banks, i would sit down with an actual broker. There is nothing wrong with Friends Life (aside for making me redundant :P) im actually a big fan of theirs predominantly down to the fact they offer best doctors but a broker will ensure you get a better deal than you will through a bank/building society.