Life Assurance/Insurance?

milek

ACG wrote: »

Im surprised your broker has not discussed what you want on the protection front to get an idea. He will have his own ideas but he should be taking into account your thoughts.
We have discussed briefly in regards to what MAY be needed, and based on that he has got quotes. I don't feel he went into much, for instance, we was not asked whether we would prefer joint or single for the life assurance, perhaps he presumed because joint is cheaper?

For B&C cover, im sole tied to just one company. The reason being is that most people tend to buy on price and even if i was not sole tied i could not compete with the online companies on price. So i deal with just one company i know and trust.
I imagine he is working on the same lines then, But in this case, he may be using the only 1 company for the income protection, life assurance as well. I know that that 1 company may not be cheaper but this kind of defeats the object of me having him, the idea is for him to save me some money and arrange some stuff, rather than getting a price from one company he works with, and gets me to sign and read over a few pages. I'm confident now that I could have arranged all this with less hassle, document signing and messing around.

With regards to life insurance/PHI/CI there is more than just price. The products can be far more in depth/complicated and i would never suggest going down an unadvised route unless you know what your doing.
I understand there may be clauses etc which could be missed, meaning I could be left in a poor position, but using large companies for comparison only rather than small ones providing the best quote should avoid this right?
And of course, checking max payouts, periods etc.

What happens if one of you were off work for 7 years? The average claim is around the 7 year mark.
My income protection stated that the limited benefit period would be 2 years anyway. Max payout over the term of the policy is just over £9,000.

Lets just say it is 1 year - do you think its fair on your family to support you?
I wouldn't say it would be fair to soley rely on family to support me, hence having savings already, other savings to come, and if I am not getting income protection, I will also make other savings through bonds or something.

You are more likely to claim on income protection than you are the other 2. To be honest i would rather have PHI than CI cover every day of the week - but thats my personal preference.
I am not saying I will not consider some form of protection insurance, but looking at what my broker has came up with, it doesnt look like its worth having.

As above.....

milek

I have just looked myself at income protection, and now what i have found seems to be better

What my broker quoted
- £250 per month cover
- term 48years
- premium £12.50
- deferred period 2months
- limited benefit period 2 years
- no redundancy, fracture or indexation

What LV quoted (a very well known insurer?)
- £250 per month cover
- Till I'm aged 50
- premium £7.84
- deferred period 8weeks
- Doesn't say a time limit?
- No redundancy, covers accident and sickness

I looked through documents for max payment on LV and cant find anything
EDIT: looking at a similar quote from another company, it says until end of cover, death, or till they are able to go back to work, so basically for the entire length of time I am to be ill

ACG

With regards to the protection front, he should have given you an IDD (Initial disclosure document) which talks about fees, products, advised/non advised etc etc - its a 3-4 page document. On there it would say tied/multi tied/whole of market.

Mine says tied for B&C, Whole of market for mortgages and protection.

Seems strange that he is recommending a limited payout policy on income protection. I cant think of any occasion where i have done that.

I think i would rather go with the one you have found on the face of it. But its important to look at things like guaranteed/reviewable premiums, any indexation - do you want it?, has it covered you for own/any/suited occupation (own is best).
Is £250 of cover really enough? You may be entitled to state benefits on top of this even so £250 is relatively low.

What happens at 50 if your unable to work?

Just to clarify, im not trying to pick the bones out of it im also not trying to push you in one direction or another. Im just trying to ensure you have thought about the different things which may be important.

It seems like price is an issue (and there is nothing wrong with that) but have you told the broker that? My recommendation would vary depending on whether i am working to a budget, looking for the cheapest or looking for what i think is the best.

It could be your broker has chosen what he thinks is best (although going with an A/S policy rather than PHI suggests otherwise) rather than what is cheapest.

milek

ACG wrote: »

With regards to the protection front, he should have given you an IDD (Initial disclosure document) which talks about fees, products, advised/non advised etc etc - its a 3-4 page document. On there it would say tied/multi tied/whole of market.

Mine says tied for B&C, Whole of market for mortgages and protection.

Seems strange that he is recommending a limited payout policy on income protection. I cant think of any occasion where i have done that.

I think i would rather go with the one you have found on the face of it. But its important to look at things like guaranteed/reviewable premiums, any indexation - do you want it?, has it covered you for own/any/suited occupation (own is best).
Is £250 of cover really enough? You may be entitled to state benefits on top of this even so £250 is relatively low.

What happens at 50 if your unable to work?

Just to clarify, im not trying to pick the bones out of it im also not trying to push you in one direction or another. Im just trying to ensure you have thought about the different things which may be important.

It seems like price is an issue (and there is nothing wrong with that) but have you told the broker that? My recommendation would vary depending on whether i am working to a budget, looking for the cheapest or looking for what i think is the best.

It could be your broker has chosen what he thinks is best (although going with an A/S policy rather than PHI suggests otherwise) rather than what is cheapest.

When looking for quotes online for income protection myself, I selected £250 as the cover I had quoted by my broker was just under that. The exact value of mortgage repayments (for the first 2 years). The income protection was soley for paying the mortgage payments. Of course, that if when it comes to needing it, more than that would be very good but that means increased premiums, so its down to "do I need it".

To be honest with you, price isn't much an issue, currently I will be able to make over-payments on the mortgage, up to £250 a month over-payments thats including still saving a fair amount a month. I'm just a tight stubborn so and so, so if I can find a possible route to save money Ill take it, providing there is still reasonable quality behind the purchase/service/product.

Currently, Giving the advice provided,
I'm probably looking more towards
Life assurance only, probably joint, decreasing term assurance
and
Income Protection, something that will continue to pay out for the entire term? so for example, if I was to become ill for whatever reason, I would get cover for more than just 2 years, preferably right up until the term end. Does this type of cover have a particular name where an insurer will know exactly what I am talking about?
In affect it is the replacement of critical illness but covers any illness right?

In regards to when im 50, hopefully I am retired then haha
I hope to have this particular mortgage paid of within 12-15years which is very reasonable.

ACG

Its called Income Protection - sadly there are 2 forms of income protection (Short term - which is what your broker seems to have recommended (which i have no idea why), long term which is also known as PHI - this seems to be what you have found yourself).

Just to be clear, PHI/Income Protection is not a replacement for Critical Illness. They both do different jobs.

My preferred method when dealing with a budget and there is a need for all 3 is to have a limited amount of CI - this can be used to pay for changes to the property (Stair lifts, wheel chair access), care, to go and get private treatment. But also PHI as this will ensure money is still coming in to pay the bills and keep a roof over the head.

Im not trying to get you to increase your cover and i have no vested interest in what you take out so hopefully this can be taken in an unbiased way - where as with your broker you could be thinking his income relies on it - but its important that if you can afford it you have enough cover in place to be comfortable.

If you have saved £5 a month great, but that £5 could be £50 when you most need it.

We have a few ways of looking at this, my preferred is:
What are your monthly costs you would have to cover every month (Mortgage, Bills, Food).
What are your monthly costs you would like to keep:
Sky/Broadband/gym/etc.

Work out how much you would need for those and thats the cover i would be putting in place.

£250 is better than nothing without doubt, but are you going to be watching the letterbox each month when the bills come through the door?

The whole idea of protection is to take that worry away.

Before i went self employed, we had a client who said he would take out protection next year and then next year and then he had a heart attack. He was plasterer from memory and self employed. He was trapped as he needed to work to pay the bills but had not taken time off to recover, it would not surprise me if i found out he has had another heart attack.
He was trying to cash in his pension - but wasnt old enough. He was a really nice guy as was his wife but they went from being quite comfortable to digging down the back of the sofa to try and find money.

For him a short term policy would probably have been fine as it would have given him that break he needed, but if he had taken out a full term policy he would probably not have had to work another day in his life (he was about 50-55).

dunstonh

Not all mortgage advisers have access to a PHI policy. If the broker is a tied agent of an insurer or limited panel then that could explain why they are not offering it.

Nothing more to add at this stage as ACG has covered it well and I agree with him that PHI is better.

ACG

dunstonh wrote: »

Not all mortgage advisers have access to a PHI policy. If the broker is a tied agent of an insurer or limited panel then that could explain why they are not offering it.

I did not realise you could be speaking to a broker who may not have access to a PHI product. Ouch! That should not be allowed.

milek

Thanks very much to ACG and others :beer:

I have reviewed the advice carefully, and have decided I will not "play chance" with any of the insurances etc. Tomorrow I will be calculating what I NEED to cover all bills etc for income protection, which should be a fair sum of money, and will be taking on life assurance only.

I know income protection isn't as you say a CI replacement, however, a good income protection should substitute it to a certain extent. This way I know I wont be relying on anyone, although I am certain they would be straight to my help if I needed it.

Thanks again,