Critical Illness or Income protection

ToriP

Does anyone have any thoughts on the above

Just taken on a joint mortgage and looking at what other product would now be suitable.

Leaning more towards Income protection as that would cover all sorts rather than an exhaustive list of illness

Each earning approx 47k each, mortgage of £160000, no dependants

Anything I should be thinking of?

Thanks in advance

roonaldo

They are different. Critical Illness would pay out a lump sum. Income protection would pay a monthly benefit and you can also get policies that cover unemployment.

ACG

They are completely different so the ideal would be to have both but if I had to choose one or the other it would be income protection.

weighty1_2

ACG wrote: »

They are completely different so the ideal would be to have both but if I had to choose one or the other it would be income protection.

I'd agree with ACG here.

There is one big plus of CI cover though and that is when a claim is made it is not dependent on loss of income, unlike income protection cover.

For example, your partner is diagnosed with a condition and is going to need taking care of for the next 6-months. Whilst they might be able to claim on their income protection cover you can't claim on yours. If your partner had critical illness as well however, this could be used to cover any loss of income you incur whilst looking after them.

For this reason I normal recommend both even if the CI is just for 12-months worth of salary of other amount, not necessarily equal to the mortgage amount

InsideInsurance

Also remember that income protection comes in two flavours

The full fat version, PHI, will be the ones people here are talking about as it pays out until your specified date (normally 65th birthday)

The budget version is ASU (aka PPI) which only pays out for a maximum of 12 or 24 months and no option of covering any pre-existing conditions

ToriP

Ok thanks everyone for the replies. So ideally you would have both, but that is unaffordable.

If I was injured in a car accident and unable to work, bad back and can't work - PHI would pay out a regular amount and CCI wouldn't

If I get one of the CCI listed illnesses I would get a lump sum. PHI would still pay out but only if it stopped me from working and it would be a monthly amount.

I think PHI would be more helpful as it kicks in for anything that would stop me working. CCI is only useful if I get a listed condition.

Is a joint or single policy (with my partner) a better idea? He ha a pre-existing health condition

dunstonh

If I was injured in a car accident and unable to work, bad back and can't work - PHI would pay out a regular amount and CCI wouldn't

correct.

If I get one of the CCI listed illnesses I would get a lump sum. PHI would still pay out but only if it stopped me from working and it would be a monthly amount.

Also correct. There are plenty of people that have had CI payouts but only been off work for a limited period (less than 12 months).

I think PHI would be more helpful as it kicks in for anything that would stop me working. CCI is only useful if I get a listed condition.

And the right way to look at it.

Is a joint or single policy (with my partner) a better idea? He ha a pre-existing health condition

Only the PPI plans are joint. Proper income income protection (PHI - permanent health insurance) is individual.

ToriP

Thanks for the advice

Looking at quotes for IP now.

They do cost somewhat!
Full term - until 65
Guaranteed - SHould stay same premium cost
Indexed - So increases with inflation
Own Occuptaion - rather than just any other job
£2000 a month

Premiums approx £35 with a 26wk defer. Will have to play with some numbers!

PeacefulWaters

ToriP wrote: »

Thanks for the advice

Looking at quotes for IP now.

They do cost somewhat!
Full term - until 65
Guaranteed - SHould stay same premium cost
Indexed - So increases with inflation
Own Occuptaion - rather than just any other job
£2000 a month

Premiums approx £35 with a 26wk defer. Will have to play with some numbers!

Based on the policy I took out for an office job aged 22 that looks like decent value.

ACG

You can do things like split deferred - ie take £1000 a month after 6 months and then the remaining £1000 after 12 months - that can help to reduce the premium although its unlikely to be a massive decrease.

One thing we used to do was to go through your expenditure and then cross off what you can live without, the remaining is what you would need to protect against. Typically you would end up with your mortgage, utility bills and food left over. Anything in excess of that would help to improve the quality of life you lead but at the very least you know you will be warm dry and fed.

ToriP

good point

Tweaked it for £1500 a month.
Aviva at £27 monthly is a bit better

If I can't do my 'own' occupation it will pay out. What if I get another job which is different to that. For instance I go and work part time in a shop etc

Would I still receive my £1500 and pay from my new alternative job. Or do I have to stop working alltogether?