Expensive premium for critical illness/life insurance

manchesterlady

Hello there,
I am looking at getting combined critical illness & life insurance policy for the first time, as I am newly single and have just bought a new house. The purpose of the policy is to pay off my mortgage should I have an accident or be diagnosed with a serious illness, or die before I am 75.

My financial adviser has come up with a few different policies which look as if they suit my requirements. The one offering the most protection comes from LV - but the premiums are £98 a month. This is a guaranteed premium I.e. It will not go up for the life of the policy.

My question is - is this sort of policy typically so expensive? Perhaps I am being naive but as a 42-year old non-smoker and non-drinker in good health, in a non-risky job, I thought it would be more around the £40-50 a month mark. The other comparable, but not as comprehensive policies came from Aviva and Friends Provident. These were around the £70-80 a month mark.

Thanks for any advice received.

jaybeetoo

Without knowing the level of cover, nobody can say if the premiums are cheap or expensive.

RickyC_IFSWP

Well it depends... £98 for how much cover and does the cover decrease or stay level during the term? p.s. what is your mortgage term... 33 years?

manchesterlady

Further info:
Cover is for £215k of mortgage; decreasing term
The LV policy covers more conditions, in greater detail, than the other policies

Thanks for the response!

dunstonh

The purpose of the policy is to pay off my mortgage should I have an accident or be diagnosed with a serious illness, or die before I am 75.

Why 75? What requirement do you have to still have cover at that age?

My question is - is this sort of policy typically so expensive?

Going to age 75, it would be. A comprehensive cover version will be more expensive than a budget plan too.

Perhaps I am being naive but as a 42-year old non-smoker and non-drinker in good health, in a non-risky job, I thought it would be more around the £40-50 a month mark.

You are 42 now. You are not going to 42 for the next 33 years though. Every year you get older, the chances of a claim increase. If you wanted low premiums, you needed to look at this in your late 20s or early 30s.

ACG

manchesterlady wrote: »

The LV policy covers more conditions, in greater detail, than the other policies

Thanks for the response!

Has your broker told you this?
There is nothing wrong with the LV policy, its actually quite good but one of the providers you have mentioned has a policy that is head and shoulders above anything else on the market.

On a side note, you realise Critical Illness will pay out a lump sum if you were to get one of the defined critical illnesses and meet the criteria.

You could look at Income Protection (PHI) to pay you a monthly income instead? This may or may not be cheaper but it covers you if you are unable to work for ANY reason, not just one of the 40-50 conditons which can include stress and bad back (unlike critical illness).

It wont pay a lump sum, but it will pay an income to cover your bills etc. Another alternative would be to have a lump sum of say £20-30k and income protection for say £1000 a month?

You really should be having these discussions with your broker though, if its too expensive then he/she should be looking at alternatives or ways to make it fit.

Andy_L

manchesterlady wrote: »

Hello there,
I am looking at getting combined critical illness & life insurance policy for the first time, as I am newly single and have just bought a new house.

Do you need the life insurance part then? Who will be made homeless by your death?

ACG

Its often cheaper to get life and critical illness than it is to get just critical illness.

weighty1_2

ACG wrote: »

Has your broker told you this?
There is nothing wrong with the LV policy, its actually quite good but one of the providers you have mentioned has a policy that is head and shoulders above anything else on the market.

Really?????

Aviva cover 46 main conditions +11 additional conditions with 18 ABI+ definitions
Friends Life cover 40 main conditions +11 additional conditions with 18 ABI+
LV= cover 44 main conditions +20 additional conditions with 19 ABI+ definitions.

LV= also have the potential to double the payout for certain accident related conditions such as paralysis, blindness, deafness, loss of a limb etc and 150% payout for certain neurological conditions, although significantly it doesn't include MS (probably due to the frequency of claims).

From that regards, LV= looks like a clear cut winner in terms of how comprehensive it is compared to the other providers mentioned.

Obviously, we could start discussing the actual definitions for the ABI+ conditions, or the additional features such as reinstatement cover with Friends Life or Best Doctors, but we'd probably end up going in circles.

OP, on the basis that both Aviva and Friends Life have very comprehensive plans I personally would be happy to have either of them and I personally wouldn't pay an additional £15+. But that' just me!

ACG have very rightly pointed out that looking at a long term income protection plan could be a better and more comprehensive route to protecting your mortgage and standar of living if you are long term incapacitated

RickyC_IFSWP

manchesterlady wrote: »

Further info:
Cover is for £215k of mortgage; decreasing term
The LV policy covers more conditions, in greater detail, than the other policies

Thanks for the response!

Ensure that the term of the policy matches the term outstanding on your mortgage - as dunstonh and I have enquired about earlier. If it's correct, then i guess you have to decide for yourself and make a trade-off. In other words, do you feel the extra definitions are worth paying for?

Anyway, if you can't decide, don't let it out you off taking out cover. Having some cover is always better than having no cover at all.

P.s. Income protection is definitely invaluable... However very few providers would cover up to age 75, and even if they do, premiums are likely to be crazy.

ACG

As I said, nothing against LV, it is a good policy.
Number of conditions covered for the sake of it is a pointless exercise. I dont doubt there are conditions which will never ever get a claim against them. When I worked for Friends Prov (pre merger) I seem to recall diabetes with Bupa only ever had 1 claim made against it.

Best Doctors for me is more important than have some of those conditions, I would prefer to know the best treatment available to me.

Im not saying your wrong btw, you clearly know what your talking about and it is all down to opinions.