Are we Overinsured?

bal56

I'm reviewing the policies sold to us by a Financial Advisor a year and half ago because we're overspending on a monthly basis and are thinking about boosting our pension contributions.
(We didn't just say yes to all policies - there was a lot of reasoned discussion of the merits of each).
We're married with 5(!) children, all 11 or under. I'm 40 and my wife's 38.
I'm a professional, my wife is fully employed at home!
We have little or no savings other than some equity in the house, and some small savings policies for each of the children.
We are covered for:
Death (of either of us) with lump sum and monthly amounts. (Me via my work pension plan and a seperate ploicy)
Terminal illness - lump sum and income replacement
Critical illness - ditto
Together all of this amounts to £341/month.
Healthcare via my company.
Pension - for me, company policy. My wife hasn't paid NI for 10 years-ish.
We're both fit and well and non-smokers, although my side of the family has some history of heart problems.
We'd welcome any thoughts on whether our finances are being well directed.

payless

obviously not aware of incomes etc..

you state

Terminal illness - lump sum and income replacement

??

do you mean you have long term cover against being off work sick?

If not that may fit in somewhere in the "needs" list as well.

Ther answer is you likely do need all the above, but its a balance between full cover and budget!

A start might be to see if these can be obtained at a lower cost ( although be careful that you don't take inferior cover)

If still spending too much, then yes a review to look at priorities might be worthwhile

bal56

Terminal illness covers conditions which would lead to death, crtical covers a lnger list of conditions which are not so life threatening, but, as you say, would mean that I (or my wife) couldn't work.

payless

Now thats the difference

Crit illness covers certain illnesses - which means you may or may not be able to work.
It does not cover a range of possible cases where you can't work because of an illness not listed
Stress, some back problems, ME, Angina.
Think about people you know who have been off work long term - would their illnesses have been covered by a Crit ill plan?-

mutley74

can you not change the deferred timescale for any of these policies, this may lower the premium and still keep u covered, but maybe after a few months of being ill/sick?

Do you need a duplicate plocy e.g. life cover, if you are covered by your work?

Could you not try shopping around again if you had to buy the same cover again? Maybe try moneysupermarket.com, payless.co.uk, to name but a few. No links just tried them both and shocked at the savings we made. You could be suprised what one can save by shopping around for a lower premium. I bet the FA you used did not reimburse/share the commission back with you? If they did that would have lowered the premiums a considerable amount to.
Alos try the idol.com and hargreaveslansdown ...and haggle over the price!
Goodluck.

Pal

I have never heard of a terminal illness insurance plan, but surely any illness which is terminal would also count as "critical" and be covered under the critical illness cover as well? Isn't this double insuring?

If so it might be worth cancelling the terminal illness policy and boosting the critical illness one instead if the definition of illness is wider.

payless

Terminal illness is normally provided as an add on to pure life cover ( either at an extra price or included with premium - was going to say free , but changed my mind)
generally pays out where life expectancy is less than 12m- so you can sort out your finances- not sure how often it is claimed.

dunstonh

it is usually an add on but nowadays many providers give it free of charge.

If the life policies were arranged any more than 3 years ago, you could get a cheaper price as the rates have falled over the last couple of years. Particulary if you bought from a tied advisor rather than an IFA.

Critical illness policies, on the other hand, have been reducing benefits and going from guaranteed premiums to reviewable premiums so it may not be worth changing that plan.

Are the plans from one provider or are the with a number of providers?

payless

it is usually an add on but nowadays many providers give it free of charge.

since when have the industry given anything free !

hence my comment

either at an extra price or included with premium - was going to say free , but changed my mind

about the changes in crit illness - thats why I said be careful about inferior cover- I did a thread a while back warning about this.

bal56

Thanks for all the feedback guys - I'll investigate your leads.