Income protection or critical illness

Bonking_Mad

My partner & I have an individual insurance policy, taken out with our joint mortgage, one policy covers the decreasing mortgage, the other policy is for a fixed amount.

In the event a terminal illness is diagnosed, each individual policy will pay-out on disclosure.

Both in early 50's, can anyone advise, what, if any, additional insurance policy maybe required, such as Income protection or critical illness.

fairandreasonable

For my pennies worth, you need to read the terms and conditions of both. I used to work in the Assurance world, long time ago but recall many a caveat, it never seemed right to me.


Best to speak with a qualified Financial Advisor and play it safe. It matters for you both.

Bonking_Mad

fairandreasonable wrote: »

Best to speak with a qualified Financial Advisor and play it safe.

Both policies were taken out many years ago when we took on the mortgage, both policies were set up by a financial advisor.

dunstonh

In your 50s you are more likely to suffer a critical illness. So, the premiums will reflect that extra risk. However, the same applies to income protection as well. So, neither will come cheap.

They are different products and have virtually no overlap. So, its like saying apples or oranges.

Bonking_Mad

dunstonh wrote: »

So, neither will come cheap

I doubt we'll afford both, so, it's knowing which one to have

dunstonh

Bonking_Mad wrote: »

I doubt we'll afford both, so, it's knowing which one to have

That involves an element of gamble as you dont know what the future holds. However, most independent advisers prioritise permanent health insurance over critical illness cover.

ACG

Income Protection pays a monthly amount until your retirement date (chosen at outset) or the end of the term (again, chosen at outset). This will pay out typically if you are unable to work due to accident or illness. There is no definition as such as to what that may be, so it could be back pain, loss of a limb or a stroke for instance.

Critical Illness pays out a lump sum for one of the pre defined defintions. In effect, there is a list that of illness you can make a claim against providing you meet the definition. Typically that would rule out back paid because your unlikely to die from that.

One will pay a lump sum, the other an ongoing income.
One will pay in theory for any condition, the other one from a list.

Personally I would lean more towards income protection. The reason being is that you are more likely to claim on it. However if you wanted a lump sum to make alterations to the house. As an example (which is kind of irrelevent as my gran would not be eligible for income protection anyway), my gran is in her 80s and this year she has been diagnosed with Alzheimers and having a few falls. The social services want to put her in some sort of assited living where as the family would rather build a toilet downstairs and keep her in the place she has lived for the last 50 years. Income protection would not pay for that, where as Critical illness would provide the lump sum to pay for it.

Sometimes its a case of a little bit of both rather than committing to one.

Speak to a broker, if they do not bring up income protection on their own I would find another. Some brokers I think are quite lazy and just discuss life and critical illness as its easier to explain.