Do I need critical illness cover?

randombirdpr

Hi there everyone,
I am married with no kids (but planning them fairly soon) and myself and my husband are both employed through our own Ltd Company.
I have been looking into Critical Illness cover and I can't decide if it is worth it.
Does anyone have a view?
I am 33 and hubby is 47 so we will have to pay more if we take out policies in future, and statistics are not on our side (I have been told by salespeople that critical illness is 5 times more likely than death, and that hubby is heading into the high risk age group).
We have decided not to go ahead with LA until we have kids but what do you all think about CI cover?
Do you have it in place and do you think it is a sound investment of your hard-earned cash? We can afford it but I am a good moneysaver and I don't like shelling out unless I have to!
Thanks

dunstonh

I have been looking into Critical Illness cover and I can't decide if it is worth it.
Does anyone have a view?

Anyone who has claimed on it will think it is brilliant.

I am 33 and hubby is 47 so we will have to pay more if we take out policies in future, and statistics are not on our side (I have been told by salespeople that critical illness is 5 times more likely than death, and that hubby is heading into the high risk age group).

You are best avoiding sales reps. Stick to IFAs. However, they are right. Statistically, you are more likely to claim on a CI policy than a life assurance policy.

Do you have it in place and do you think it is a sound investment of your hard-earned cash?

I don't have it. However, my savings and investments allow me to self insure. However, I know put many in place and I know other advisers that have it. Including one that claimed on his last year. I see more CI claims going through than life assurance claims.

We can afford it but I am a good moneysaver and I don't like shelling out unless I have to!

Some insurances are a complete waste of money and cash cows to the provider. CI is not one of those. Like any insurance, if you pay it for say 20 years and never claim on it you may think it was a waste. However, its better not to claim as it means you havent suffered a critical illness. However, if you do suffer it, then the payout will cover lost income and any capital capital requirements (such as mortgage or paying for house alterations if mobility is affected).

HappyMJ

randombirdpr wrote: »

Hi there everyone,
I am married with no kids (but planning them fairly soon) and myself and my husband are both employed through our own Ltd Company.
I have been looking into Critical Illness cover and I can't decide if it is worth it.
Does anyone have a view?
I am 33 and hubby is 47 so we will have to pay more if we take out policies in future, and statistics are not on our side (I have been told by salespeople that critical illness is 5 times more likely than death, and that hubby is heading into the high risk age group).
We have decided not to go ahead with LA until we have kids but what do you all think about CI cover?
Do you have it in place and do you think it is a sound investment of your hard-earned cash? We can afford it but I am a good moneysaver and I don't like shelling out unless I have to!
Thanks

You need to think what would happen if either of you was not working...what would happen. How much income would be lost? What support would you get from benefits? If you had kids you would get quite reasonable amounts in child tax credits and income support. The interest on the mortgage would also be paid. Unsecured debts can go unpaid until the kids are old enough for one of you to go back to work. Personally, I wouldn't buy it but as previously said someone will come along and say it's the best thing ever as they did claim on it. Me I'd self insure and save the premium.

Bennifred

I can only say that I wish I'd taken it out at your age!
We took out life insurance when young, but only added CI cover for my husband, as he is the main earner and I was a full time mother before going back to work part-time on a very small wage. Very shortsightedly, we only considered the effect of losing the main income, not additional costs incurred by illness in any individual.
Then I was diagnosed with MS at the age of 50, and the extra money would have made a huge difference to our situation. Different car needed, adaptations around the house, privately funded drugs etc etc. You just never know!

weighty1_2

There are numerous factors to consider when deciding whether you "need" critical illness cover, including the following:

1) What would happen to your income if you were unable to work due to being critically ill?
2) Would your husband be able to, or even want to, still work full time if you were seriously ill or needed looking after?
3) Is one of you more important within the business than the other? If yes, then how would a serious illness impact the businesses whole profitability?
4) Which of your luxuries do you want to give up if one of you does fall ill? (few people have enough assets to complete maintain their lifestyle if unable to work)

I'm an adviser and I have some critical illness cover. I also have a long term income protection plan as I feel this provides better cover because it provides a broader range of cover. Do I need it.......well, I guess I'll find out over the term of the policy. However, in my mind it's better to have it than to risk the financially devastating effects of losing your income especially when, as you say, you can afford it.

Just my opinion though.

randombirdpr

Thanks very much everyone for your responses!
I apologise for the delay in responding - I need to change my settings so that I get notified when I receive replies!
I think we are going to go ahead with 2 separate policies as it is affordable for us and will set my mind at ease.
If the worst happened and one of us died we have mortgage cover in place so the house would be paid off and we could carry on working. But, as Bennifred says, there could be unknown associated costs to CI plus it could mean the other person might need to stop work for a while.

kingstreet

What happens if you are unable to work due to illness or disability but don't get one of the listed illnesses?

How long would your employer continue to pay you and how much would they pay?

When those payments end, how would you pay your mortgage, bills and critical illness cover premiums?

Think about income protection before critical illness cover.

malchish

You need to very closely read the fine print in T&C.
You need to find what their definitions of a criical illness are. Insurance reps hate to discuss fine print or give the full policy terms away. You may find, that cancer in situ is not critical, that 3rd degree burns must cover at least 40 % of the body surface.. - and still if you live less than 28 days after the diagnosis, they won't pay.
Once I remember we read Halifax ci insurance - it was worse than worthless in our opinion.
Any survivor would fail to qualify for their ci, any non-survivor would not qualify either. Basically, there are no living creatures who could satisfy their definitions and survive 28 days.
The catch is in the critical illnesses definitions.
Another catch is that, unless you have not seen a hospital in your life (then you are unlikely to need ci ins)and had no bloodtests ever , they will put the price sky high. Or, they will always find something you have not told them... acne 35 years ago may make them refuse to pay...
In my personal opinion, these insurances are the most despicably unfair businesses in the world. They thrive on deception, and feed off gullible.
After you read the small print, you will see if the "cover" makes sense.

randombirdpr

Thanks for these responses. I am going to take on board your thoughts and explore income protection a bit more I think.
Enjoy your day off everyone!

randombirdpr

Just another couple of points which might be useful to point out:
- we have enough to keep us going for 6 months in our emergency fund (ISAs)
- we are starting to invest in property and should be able to buy at least 1 buy to let each year
- hubby has a couple of minor health issues to consider (acid reflux and chronic rhinisitis) so he would not be on standard terms, i presume which would make the costs even higher
Does anyone have any more thoughts based on this?
I am thinking to steer clear of CI and go for IP and look at LA next year.
What do you think?
Thanks for your help!

_Andy_

malchish wrote: »

Or, they will always find something you have not told them... acne 35 years ago may make them refuse to pay...
In my personal opinion, these insurances are the most despicably unfair businesses in the world. They thrive on deception, and feed off gullible.
After you read the small print, you will see if the "cover" makes sense.

Hardly:

http://www.yourlifeprotected.co.uk/news/critical-illness-payout-rates-increased-in-2012/