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Insurance - Do we need all 3 types?

???
Hi all,

Can anyone tell me whether or not we require all 3 of the following policies:

level term & critical illness cover - to cover mortgage.

personal income protection - provides income in event of illness.

mortgage protection insurance - provides an amount each month to pay off mortgage and other related bills.

It seems as if we are over insured & that perhaps the last policy mpi is duplicating the other 2 policies?

Any insights would be appreciated.
Sincerely,
Confused.........

Comments

  • Milarky
    Milarky Posts: 6,356 Forumite
    Part of the Furniture 1,000 Posts Photogenic
    Just to add to air of uncertainty [not having any answers myself].. If you buy a regulated financial product there is a general requirement to 'fact find' on the part of the salesman . This would not appear to be the case with insurance at present - otherwise Ali N-R should not have to ask if he is overinsured.

    Is regulation of general insurance likely to be different in the near future, with this sort of requirement being placed on firms?

    Thanks in advance.
    .....under construction.... COVID is a [discontinued] scam
  • dunstonh
    dunstonh Posts: 118,581 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    the answer to whether you need them is a personal thing and some will, some will not.

    The easiest way to ascertain if you need it is to say.

    "will I or someone i care about be financially worse off in the event of xxxx" - where xxx is you would insert the relevent cover offered. Ie in the event of death or critical illness. If the answer is yes, then you need it, if no, then you dont.

    Personal income protection can cover a accident sickness and unemployment (ASU) or PHI. The latter being the better of the two for most people but rarely offered on mortgage transactions as it is a regulated insurance policy, unlike ASU. The ASU can also be called mortgage protection insurance.

    PHI and ASU often co-exist. ASU usually only pays out for 12 months (or the 12th month from the claim start, which can mean only 10-11 payments). The PHI can then kick in after 12 months.
    Is regulation of general insurance likely to be different in the near future, with this sort of requirement being placed on firms?

    There will be a requirement to ask more questions when dealing with general insurance in the future but the level of detail will not be anywhere near close to that asked under the regulated process. I have seen the draft copy of the GI factfind being put together by the UKs biggest network and it is 5 sides of A4 and this covers all areas they can do. My regulated factfind (assuming all areas) is over 22 pages. Even if i limited advice to protection only i would be looking at 10 sides of A4.

    The biggest difference is still that regulated advice will analyse and calculate the shortfall. GI & pure protection still puts the onus on the client to say how much they want to cover or how much the mortgage is.

    The suitability letter on regulated advice contains warnings and information to be aware of. Mine are usually around 8 pages. The GI and protection suitability letter contains one paragraph confirming issue of key features and copy of factfind (how can they call it factfind when it isnt!). The template shows one side of A4.
    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.
  • Hi,

    Thank's for the information, using this I have figured out that I do actually need all of them. Its expensive but in the event that we ever need them we will be glad we kept them running.

    Thanks again.

    Ali(son)
  • dunstonh
    dunstonh Posts: 118,581 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    If you didnt get advice from an IFA, you could see if the IFA can rebroke the cover and get is cheaper.
    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.
  • payless
    payless Posts: 6,957 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Of course - making sure you are happy with any differences in the critical illness definations ( some insurers have changed what they will pay out for) and that the basis of claim ( own occupation etc.. on CiC and Inc protection )  is as good or better than before .

    of course a good IFA  or insurance  intermediary  ;D  would do this
    Any posts on here are for information and discussion purposes only and shouldn't be seen as (financial) advice.
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