MPPI and Critical Illness

choppermart

hi,

as a result of visiting the MSE site i've been looking at my finances more seriously than i think i've ever done and have discovered a couple of insurance policies connected to my mortgage.

one is an mppi covering disability and unemployment through payment shield, which is a reasonable price per month, and the other is a critical illness policy through legal & general, which is double the price of the payment shield.

does anybody know whether both types of policies are actually necessary? do they effectively do the same job?

hope you can help

thanks

dunstonh

Only you can decide if they are necessary. Different people have different views.

Ask someone who has lost their house following a heart attack because they cant work anymore and cannot afford the mortgage and they will say yes. Anyone who knows that person would say yes.

Ask a young person who thinks they are invincible and knows no-one who has suffered a critical illness and they will say no.

Out of ASU or CI, you are statistically more likely to claim on the CI policy than the ASU. You also stand to lose more if you don't have CI compared with not having ASU.

choppermart

thanks for that.

sounds like it's probably best to keep both to be on the safe side but find a cheaper equivalent CI.

thanks again, much appreciated.

Iona_Penny

Take my advice and look very closely at your policies for both insurances.
Are you in a job that pays full salary for 6 months followed by 6 months at half pay? check how long before the policy starts to pay out if you are claiming for illness.

And what do they term disability? Is it as a result of accident and what do they include and exclude?

As for the critical illness be very very sure what they will pay for and what they exclude. Letter in the telegraph at weekend described a policy that paid for cancer diagnosis but surgery removed the affected part of the bladder and so the policy said it was a cancer in-situ and would not pay out; there are several cancers that would fall into this category if treated, coz then you won't have it!

Basically be 110% sure what you are paying for. If you have had the policies a while and started them when quite young your premiums may be ok and you obviously wouldn't get those again but pleeze check the small print and ring and ask for clarification.

dunstonh

With CI there are 2 basic levels of cover; Comprehensive and Core conditions only. Different providers have different terminology too.

There are also two types of premium/cover. Guaranteed and Reviewable. Guaranteed means that the premium and level of cover/terms will not change over the term of the policy. Reviewable allows the insurer to amend cover/premiums at given points in the policy term.

A few changes to the cover offered on CI was made about 2 years ago and this can mean that older policies can offer better CI cover than current plans.

If you arent careful, you can end up on a cheaper plan but with a lot less cover.

payless

dunstonh wrote:

Out of ASU or CI, you are statistically more likely to claim on the CI policy than the ASU.

Not saying this is right or wrong - ( but not my personal experience) just interested if you have a link to any such research

dunstonh

I havent got any recent research but i had one of these printouts from a life company showing what the successful claim ratio to policies running was. If was something like 1 in 5 for life, 1 in 6 for CI and 1 in 12 for ASU. PHI was something like 1 in 16.

I think the important thing here is successful claims and it was one insurer. I have known quite a few claim on ASU but not get paid out. I dont know many that have had successful claims though. However, that probably has more to do with my client bank and classes of business I transact.

payless

I take what life companies say with a large pick of salt -

Personally I doubt if (mtg related) ASU claims are as high as 1 in 12 of running policies-
( based on personal clients & looking at premium rates - does not make sense)

I remember research presented by a ( now no longer in the market) PHI / IP provider that suggested a much higher likeihood of IP claim than CiC.

Of course most stats "research" in CI goes to age 65, whereas many people don't take/ keep cover to that age, and includes cases taht later lead to death anyway.
( i would be interested in seeing survior figures to ages 50 / 55)

---
Last yr S L stated that 20% of CiC claims were rejected- assume mainly people thinking the cover was wider than it is.
--

My client bank is mixed albeit mainly working age - ranges from manual workers to £500K pa earners ( not in sub prime market, nor in celebrity areana)

- I'll answer the bit about ASU claims in a few weeks ( I used to work in Longbridge on Rover doorstep)