Scottish Widows Life Insurance

Whistler41

Last year I was asked if I want to take out a Scottish Widows Life Insurance policy with Critical illness cover with Lloyds. This, they say, will protect the two loans I am currently paying back to Lloyds. I'm paying £21 per month for over 26 years, and it will insure me for £30k. I have no dependents/beneficiaries, and I'm wondering now is it actually worth paying £26 per month for all them years?

Should I cancel? Was I duped into taking out life insurance for the sake of it?

Many Thanks

Stuart

busicat

Sounds alright to me.
Nothing to do with dependants but how you personally would manage if you were hit with a critical illness.
So if you had say a heart attack or cancer, you'll be likely to be off work for quite a while..if it was stroke, maybe not able to work again. So if you've got the pay-out, you've got a choice of whether to pay the loans off in full, or instead use the money for paying your overall outgoings or maybe pay for something that helps with your illness.

When I I got my pay-out for cancer, can't tell you what a huge difference it made at the time.

So I'd be voting you not only keep that cover, but see about getting income protection too, unless you're making sure you've got stacks of "rainy day" savings

weighty1_2

If I was you I'd look at just how comprehensive the Scottish Widows critical illness plan is. I'll give you a clue.............it's not!

I've recently reviewed a new client of mine's existing Scottish Widows cover and have arranged a plan which pays out the full sum assured on 15-more conditions and also pays out a partial payment on diagnosis of 16 other conditions.

I always think it's worthwhile having cover in place, just make sure that it's the right cover though.

magpiecottage

It doesn't matter what Critical Illness cover you choose, if you are not "fortunate" enough to get the right illness it pays nothing.

For that reason, Permanent Health Insurance (aka long term income protection) is preferable. It will not pay off the loan in one hit but it will provide a means to meet the repayment and general living costs regardless of what the illness preventing you working actually is.

[Deleted User]

magpiecottage wrote: »

It doesn't matter what Critical Illness cover you choose, if you are not "fortunate" enough to get the right illness it pays nothing.

I agree, no point paying for cover of "15-more conditions and a partial payment on diagnosis of 16 other conditions" when a long term health policy would pay out in the event of any illness.

kingstreet

I think, in order here;-

- don't buy insurance products from banks

They are often more expensive than the same product through an "untied" outlet

- don't buy Scottish Widows (LBG's tied insurer)

Its products (particularly critical illness cover) are lower quality than the available alternatives, again from an untied source

- income protection may be a better option

If you do not have employer-sponsored health/disability income protection this may be a better option than critical illness. You are currently gambling on getting one of a list of illnesses where, if you get the wrong one, you get nothing and are unable to work and earn, but don't get a payout.

Income protection would remedy this. If researching always get "own occupation" cover.

opinions4u

Duped? No. If you suffered end one of the specified ailments it would pay out.

While the life cover isn't strictly needed it's probably a tiny part of the premium, so not worth worrying about.

Me? I'd prefer something that replaces my income in the case of illness. While a £30k lump sum may be very welcome £1,000 a month up to retirement age may be more beneficial.

stephenni1971

Moneyineptitude wrote: »

I agree, no point paying for cover of "15-more conditions and a partial payment on diagnosis of 16 other conditions" when a long term health policy would pay out in the event of any illness.

Sorry but that is just nonsense.

Client A has CIC policy for £50,000.

Client B has PHI for £1500pm with three month deferment.

Both suffer heart attack with permanent muscle damage and have bypass followed by six months recovery before returning to work

Client A gets £50,000

Client B gets £4,500

You CANNOT compare CIC and PHI. They are different products designed to do different things. For every example you can cite of PHI covering something CIC would not you can do the same for CIC over PHI.

A good adviser should suggest a combination of both.

weighty1_2

stephenni1971 wrote: »

Sorry but that is just nonsense.

Client A has CIC policy for £50,000.

Client B has PHI for £1500pm with three month deferment.

Both suffer heart attack with permanent muscle damage and have bypass followed by six months recovery before returning to work

Client A gets £50,000

Client B gets £4,500

You CANNOT compare CIC and PHI. They are different products designed to do different things. For every example you can cite of PHI covering something CIC would not you can do the seamen for CIC over PHI.

A good adviser should suggest a combination of both.

Excellent point. Let's face it, the majority of CIC claims are for cancer and heart attacks, both of which can be recovered from within a 12-month period in many cases so to have CIC in place for debt repayment can result in a massive reduction in financial stress, not only whilst incapacitated but throughout someones life.

I think the last sentence is something which everyone can agree on?

magpiecottage

stephenni1971 wrote: »

You CANNOT compare CIC and PHI. They are different products designed to do different things.

No they are not but you clearly do not understand the threat that the compensation culture and FOS present to you.

If you sell PHI and your client suffers an illness that causes a payout a complaint that they would have got more from CI will fail because the PHI clearly met a need (that is why it paid out).

Sell CI and they suffer an illness that it doesn't pay out on and you are open to a claim that you should have ensured the need to cover ANY illness was addressed first and therefore the CI was missold.

Whilst it is unlikely the FCA would pick up on this, I have seen a firm on the receiving end of a very large complaint on this point!

Of course offering both is good but only if affordability is not an issue.

stephenni1971

magpiecottage wrote: »

No they are not but you clearly do not understand the threat that the compensation culture and FOS present to you.

If you sell PHI and your client suffers an illness that causes a payout a complaint that they would have got more from CI will fail because the PHI clearly met a need (that is why it paid out).

Sell CI and they suffer an illness that it doesn't pay out on and you are open to a claim that you should have ensured the need to cover ANY illness was addressed first and therefore the CI was missold.

Whilst it is unlikely the FCA would pick up on this, I have seen a firm on the receiving end of a very large complaint on this point!

Of course offering both is good but only if affordability is not an issue.

What sport of fine was levied on the firm for the mis sale?