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Advise me!!

Hi,

I went to see a HSBC financial advisor today because I had some free time and the lady said he could 'save me money'. Spent 2 hours talking about me dying and how this would effect my family and how I wouldn't be able to live off £8 a day if i became ill. Blah, blah, blah!

I've just finished my first year of teaching with a salary of £19,641 which is going up to about £21,700 next year. I am paying about £100+ a month into the teachers pension scheme which I started in Sept 2006. I do not own a house or have any children as of yet. I have about £30,000 in savings. My questions for people are:
  • do i need a income protection plan? (for when i become ill and cannot work? i'm assume the government will help me out)
  • Do i need a policy which pays out lump sum if i cannot work? or die?
my sis reckons the HSBC guy was just trying to scare me.

any comments much appreciated!
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Comments

  • Andy_L
    Andy_L Posts: 12,963 Forumite
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    emma396 wrote: »
    Hi,

    I went to see a HSBC financial advisor today

    and that would be where you went wrong ;) She would only have been able to advise you on HSBC products which may or may not be the best avaliable (which do you think is more likely?)

    As a member of the teachers pension scheme (TPS) you already have a lot of ill health income protection as an additional benefit

    I'm assuming you're maried, if you die will your spouse be unable to pay the mortgage, considering that the TPS, IIRC, will pay her 2 years of your salary.

    Your best bet is to see a proper Independent FinancialAdvisor (IFA) ideally someone personally recomended by someone you know, failing that the Teachers Unions should have a firm "on retainer" who would hopefully understand how the TPS would interact with your needs.
  • emma396
    emma396 Posts: 760 Forumite
    Part of the Furniture Combo Breaker
    he claims he was independent!
  • dunstonh
    dunstonh Posts: 118,615 Forumite
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    Employed by a bank, selling HSBC branded products and claims he was independent?

    To be fair, they do have an IFA arm available to Premier customers but their normal advisers are tied. However, their IFAs are still employed in a saleforce environment and no decent IFA is going to work for a bank. Banks are where you learn the trade and move on from. There have been suggestions that their IFA arm is more of a panel than whole of market.
    my sis reckons the HSBC guy was just trying to scare me.

    No. His job is to point out shortfalls in all areas (assuming full review). The shortfall may not be significant but he has an obligation to do so.

    If you have no family or anyone that will be worse off in the even of your death, then life cover is not a shortfall area for you. Income protection is as although the Teachers benefits are very good, it doesnt go on forever.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    emma396 wrote: »
    do i need a income protection plan? (for when i become ill and cannot work? i'm assume the government will help me out)

    The Govt would expect you to spend your savings before getting any benefits. But you do have protection under the teachers pension: check out how much and for how long and then take a view on how likely you are to get sick enough to need protection for more than that.

    It's probably fairly unlikely you need these sorts of products if you don't have children or a mortgage.

    Did the advisor not want to say anything about how to invest your (quite considerable) savings? Or are they earmarked for a house deposit?
    Trying to keep it simple...;)
  • emma396
    emma396 Posts: 760 Forumite
    Part of the Furniture Combo Breaker
    they are earmarked for a house, but not sure when that will happen.
  • jem16
    jem16 Posts: 19,496 Forumite
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    EdInvestor wrote: »
    But you do have protection under the teachers pension: check out how much and for how long and then take a view on how likely you are to get sick enough to need protection for more than that.

    Teacher's pension is usually 6 months on full pay followed by 6 months on half pay. It then stops.
  • emma396
    emma396 Posts: 760 Forumite
    Part of the Furniture Combo Breaker
    jem16 wrote: »
    Teacher's pension is usually 6 months on full pay followed by 6 months on half pay. It then stops.

    do i need more than this?
  • dunstonh
    dunstonh Posts: 118,615 Forumite
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    do i need more than this?

    If you end up long term ill then yes.

    The stats are around 1 in 16 will be off work for longer than 12 months. So, whilst its not is much as life cover (in 1 in 5 men will die before retirement) or critical illness (1 in 6 suffering a claimable event) its the consequences of loss of income that matters. The cost of a teacher with 12 month deferment is actually very cheap and far better value than MPPI (for example) when you do get round to getting a mortgage.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Andy_L
    Andy_L Posts: 12,963 Forumite
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    jem16 wrote: »
    Teacher's pension is usually 6 months on full pay followed by 6 months on half pay. It then stops.

    That's sick pay not pension. Ill health pension is immediate payment of accrued pension ie naff-all for the op (1/60th of salary) plus some extra years if they are unable to work at all rather than just not teach.
  • dunstonh
    dunstonh Posts: 118,615 Forumite
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    There is a misconception with teachers (and other civil servants) that I have come across in the past that they dont have to worry as the pension will make up the difference. There is some element of truth in that with those with decent years of service. However, as Andy L says, 1 year is 1/60th of salary. That isnt going far.

    Plus, nowadays, the pension trustees are not quite as generous as they may have been in decades past.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
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