Whole of life assurance and income protection queries - to IFA or not?

a-ztech

Hi,


I've been looking online at sorting out my finances and getting a whole of life policy but there aren't many online quote sites I can find as most cover for up to 50 years. There is payingtoomuch.com/insurance/whole-of-life.aspx (can't post direct hyperlink) which has been mentioned on previous threads but that's all I could find. I understand from other older threads that there are different/complex rules and fewer returns for the referrers/insurers regarding whole of life assurance, and that is why they're scarce but I was hoping there'd be at least 3 sites to compare against, excluding directly dealing with the providers.


Wondering whether anyone knows of any others? If not I'll have to look at IFAs but have reservations as I wouldn't know whether they have given me the best deal for me or ongoing commission for them - cynical I know. I suppose I'm also asking whether seeing an IFA is likely to prove all that useful as I'm reasonably decided on what I want (perhaps not what I need, but the rest can go to estate), but I don't know if they scour the whole of market, as per some mortgage advisors, or have a few go-to policies given the complexity. Mortgages seem more straightforward and there's a lot more information out there.


My situation is I'm a 38y male sole earner (well, never smoker) in household of 6 with 4 children, the youngest is 5y. NHS worker so get 2x basic death in service benefit but am looking at relocating down under at some point in the next 5-10y so I'd like a policy that caters for this, as well as genuine guaranteed premiums (as a few that I have looked at state guaranteed premium but review at various intervals). I'll probably leave the NHS before this so would lose the death in service benefit.


I plan to arrange some form of long term income protection too, instead of critical illness cover, but am not too concerned if it can't follow me - and would be surprised if it could. I also don't see how some providers only give 1-2y worth of income whereas others can cover for 20y, til age 60y, for not much more in premiums, considering the additional expense.


Best figures I have come across are £222/month for £400K sum assured whole of life with LV, and £75/month for £4,750 income protection paid til the age of 60y with The Exeter. I think its a fair sum to part with but I figure the security is needed (and there's no TV subscription or even license fee to pay which could add to as much). Outstanding mortgage is around 100K and would need to provide a lump sum and consider universities.


If I live until 90y (very doubtful!) I'd part with c£140K for the WoL policy but at least there'd be something to pass over. I wouldn't be investing the money elsewhere in particular and would prefer the security.


Any pointers appreciated.


Happy New Year!

csgohan4

Whole if life covers are very expensive as it covers your death. I wonder if that monthly premium will go up as you get older??

dunstonh

If not I'll have to look at IFAs but have reservations as I wouldn't know whether they have given me the best deal for me or ongoing commission for them - cynical I know.

Cynical and daft really as the research will show the providers in premium cost order. That doesnt make the cheapest best but the IFA would need to eliminate the cheaper alternatives with valid reasons. I doubt an IFA telling you that company A is eliminated because company B pays more commission would be an acceptable reason to you. However, most IFAs are fee based and rebate commission. So, if you are cynical on commission, then dont use that method.

I plan to arrange some form of long term income protection too, instead of critical illness cover, but am not too concerned if it can't follow me - and would be surprised if it could. I also don't see how some providers only give 1-2y worth of income whereas others can cover for 20y, til age 60y, for not much more in premiums, considering the additional expense.

the 1-2 year versions are typically PPI plans. The long term ones are PHI. Very different. Comparison sites tend to focus on PPI as its the easier product to sell (less admin and more profitable). PHI still frequently has paper applications and is medically underwritten at point of sale (unlike PPI).

Best figures I have come across are £222/month for £400K sum assured whole of life with LV, and £75/month for £4,750 income protection paid til the age of 60y with The Exeter. I think its a fair sum to part with but I figure the security is needed (and there's no TV subscription or even license fee to pay which could add to as much). Outstanding mortgage is around 100K and would need to provide a lump sum and consider universities.

With PHI, you effectively have budget, standard and comprehensive cover available. It isnt called that but you can put plans into those three types. So, premium is not a good measure without knowing you are comparing like for like.

Chris_Pollard

Speak to a financial adviser. Perhaps be open minded to a challenge around whether a lifelong commitment of £222 per month for "whole of life" life assurance is right for you and your family.

Income Protection (IP) has a number of different options, "waiting period before benefits are paid", "whether, if you fall ill and cannot work, benefits will be paid for two, five or till a selected retirement age. What level of benefit you need - and much will depend on the NHS sickness benefits you are entitled to, and at what point they might reduce, or stop completely. IP products are flexible so that one policy might start paying after 13 or 26 weeks absence, whilst another could pay out once you have been incapacitated for 12 or 24 months. It can seem complex so a professional adviser would be a sensible next step.

ThinkingOutLoud_2

Well done for thinking hard, seeking input and also being willing to commit the money to takes to buy some serious levels of cover.

I have a few things for you to ponder - which may not be the direct answer you seek:-

- what made you go for whole of life?
- how will you help pay for their university if you don't die so they get the whole of life payout? (won't they be there before you are 60?)
- are those premiums really fixed for life as with a typical term policy? Will the insurer not review them after 10 years?
- will your family need the same sum always - e.g. once the children have been through college - won't their needs go down by the cost of that at least?
- if you die younger won't your partner need more income to last her life then vs if you are 88 and she is older too?
- if you emigrate as you suggest - check very very carefully you can continue to have the policy (most information I have seen suggest most UK insurers can and will only insure UK living lives) - e.g. would it make sense to go with a simpler term policy until you go that you can cancel and then set up a your "ultimate" policy that can endure in Australia ?
- using Aviva online as simple quick tool (not a recommendation) I think you could have £400k sum insured on a 50 year decreasing sum term life policy for <£40 a month
- if you put the other £182 or so (£222 less £40) into your pension or another form of long term investment (with IHT considered) - you might have a pot building towards £300k BUT have some flexibility when and if you dip into to pay for their education or whatever else life brings.

Appreciate these questions may not help close out your thoughts - but they seem worth a minute of thinking each!