Which insurance with new mortgage?

jtothec

We are wading through the myriad of mortgage/life/critical illness/income protection because we are taking on a new mortgage of £145K for term of 20 years.

Husband is 47 (f/t employed) and I am 50 (housewife with no employment). No serious illness in close family, both healthy and non smokers. Two kids 12 yrs and 8 yrs.

Given our circumstances below what are our best options :-

Husband work benefits : Death in Service £120K
6 Months Full Sick Pay

My benefits (?): Mortgage free rental property currently bringing in
£14,000 pa after tax/maintenance etc.
This property is valued at £250K -
which I have left in trust in my will to kids.
Children have a Co-Funds account which will give
them a lump sum at age 18 or 21yrs.
My mother has a large Transact portfolio which
pays my son's school fees
and she helps us out financially in other ways.

Eventually I would inherit half of this portfolio.

We have been quoted £86 a month for Life Insurance (decreasing) and CI (just £25k lump sum pay out). Is this our best/only option given our situation?

Husband gets a generous sick pay allowance and I would still get rental income if I were sick.

It has been suggested that we should look at Income Benefit as this pays out for whatever reason my husband can't work and not just a serious illness. I've read that you're more likely to lose job than succumb to a critical illness. Definitely need the mortgage paid off if one of us dies I guess ie Life Insurance

What is standalone unemployment cover? And permanent health insurance? We wouldn't wish to over cover and pay for something we don't need. I realize this is the nature of insurance though.

Really confused by all the options. Thank you for reading,

InsideInsurance

The problem is that lots of companies create "marketing names" for products and different companies use the same names for different products.

There is one product, Accident, Sickness and Unemployment (ASU) which is a budget product as it only pays out for 12 or 24 months. This can be bought as ASU, AS or U so standalone unemployment cover is this.

Permanent Health Insurance is the full fat version of "AS" as it pays out until your 65th birthday (or date of your choice) and could be deferred by 6 months or more to reduce the premium as you've got 6 months sick pay and possibly savings etc.

Critical Illness I am not a fan of as it only pays out on specified illnesses at a specified level of severity. Some wont take you out of work but you get paid anyway. Others arent covered but may mean you never work again. The other problem is that as time goes on medical procedures change and so suddenly you may not find you're covered for something because your policy requires you to have had open chest surgery but current practice is now keyhole surgery.

You may be more likely to become unemployed than be sick but how long until you find your next job? The average PHI claim is in the region of 8 years so its rarer but more worse when it happens.

You really should see an IFA or an advisory broker who can review your current arrangements and suggest the best way forward. PHI is almost exclusively sold via these and so if your considering it then its necessary anyway.

jtothec

I did speak to Vita Insurance brokers on the phone and they went through our finances with a fine tooth comb. They then suggested we take out Life Cover and Critical Illness cover for £170 per month for both of us! Bit too steep for me I'm afraid.

I've just googled permanent health insurance. Wonder why none of the insurers I have spoken to flagged this up? It may be worth looking into.

I too feel the same about critical illness cover - the chances of having a specific illness plus the required level of severity etc for them to pay out.

Great thing about these forums is that I've learned something new - private health insurance - no one has mentioned that before!

Thanks you. Any more thoughts would be greatly appreciated.

InsideInsurance

Unless you have a recommendation of a good whole of market advisory broker then I would look for an IFA who specialises in Protection (unbiased.co.uk will help you find some)

PS. private health insurance is normally an alternative name for private medical insurance ie paying for you to see private doctors/hospitals etc eg BUPA rather than permanent health insurance

kingstreet

Another vote for PHI here.

See a specialist broker/IFA. Have them establish your needs and budget.

Once that is done, they can then fit benefits within that budget based on prioritising the needs in order of importance with you.

Sometimes, it's better to deal with each need using separate cover with different providers.Other times, a "menu plan" with one provider can be used to provide a bit of PHI, a bit of life cover, a bit of critical illness cover and so on and this avoids multiple policy fees as only one is charged on the single overall menu plan.