Critical Illness/Life

lippy1923

How do you decide what cover/level of cover is right for you? Can you get advice from a professional that isn't a bank sales person trying to flog their products?
Myself/DH have life and critical illness cover currently, but I need to make some changes.


We both have death in service benefits with work, so as long as we remain working this gives us 4x our annual salary. This is fine for both of us as this covers the small mortgage we have left and then some. Obviously this might change in future if we upsize but would then review needs again at the time.
With that in mind I'm thinking we don't necessarily need life insurance. Any more would just be a nice to have I suppose.


Critical illness is what I am concerned about. DH has sadly taken up smoking. Policy was taken out years ago when we were both nonsmokers. Although I have trawled through all the policy docs and cannot see anywhere that this invalids the policy I assume it would now he has started smoking. So I think we need to take out a new policy declaring him as a smoker.


How much critical illness do people usually take out? Any quotes I look at seem to include life insurance as well, which we don't really need.


I know it will vary for everyone, but back to my original question above, how do you decide what level is best for you?

justme111

Can you answer the question- what do you intend to do with a payout in case there is critical illness in family?

lippy1923

justme111 wrote: »

Can you answer the question- what do you intend to do with a payout in case there is critical illness in family?

Interesting, I suppose I would just use it to pay of the mortgage/debts. Anything left over I don't really know.

justme111

So what is the point of it then?
I suppose it can be useful in the situations where a couple has a mortgage/outgoings which can not be managed with savings for a few months. So when one of them falls ill and another one has to care for them then there is income. Even so , it could happen with illness which is not critical so in that case this policy would not pay. If your mortgage is minimal then would not getting rid of debt and building up savings be better use for money? If you adamant you want insurance that I would guess income protection policy could be more useful. Think about it - you want cover in case of life changing illness, which does not have to be necessarily terminal.

lippy1923

Thank you for your comment. I didn't even consider income protection but I will keep this in mind as an option.

Chris_Pollard

You mentioned that your partner has existing insurance on a "non smoker" basis but he is now a smoker. Good to see you have checked the Terms & Conditions, as most life and critical illness (CI)insurance policies will not be invalidated if a "non smoker" becomes a "smoker". The premiums will be significantly higher so I'd think carefully before cancelling or replacing the existing insurance you have.

In terms of "how much CI do most people take"? In my experience most match the level of cover with their mortgage liability. The cost of having life cover as well is negligible (indeed many CI policies come with life cover as standard). Ironically, despite matching the cover with the mortgage amount, in my experience (backed up by some insurer's research) many customers do not use the cover to pay off the mortgage entirely. In fact the majority didn't in one survey. Part of the benefit of the lump sum payment is that you can make a judgement based on the cause of your claim and how it has affected you and your family. If you have had made a full, or full-ish, recovery, you might be back at work, but if you suffered from a heart attack, you might wish to consider early retirement, or cutting back on work (not many people when they reflect on their lives wish they had spent more time at work!) so the lump sum could help with this.

As an earlier post suggested, it is worth thinking about the non critical illnesses that might prevent you or your partner from working. I'd check what your employers long term sickness benefits might be and consider a combination of Income Protection (sickness insurance) and either sticking with the existing Life and CI policies.

You mentioned an aversion to going to a bank in case they "flog their products", but I'd encourage you think about seeking financial advice and not limiting yourself to insurance protection advisers. It might be that your insurance needs are just fine, and perhaps pensions or long term savings might be more appropriate. I'd recommend this so that an expert can take a holistic view of your financial "health" today and what you want to achieve in the future. Good luck.

fleetingmind

From personal experience it was the best thing I ever did. You take these out and never intend to use them but with a wife and two small kids I wanted to ensure my mortgage was paid off so that worry was gone for them if the worst happens and my life insurance at work would help them out for a few years after. I was paying £80 p/m for a joint life/critical policy. Mine was for £160k to cover my mortgage.

As an earlier poster has said they don't cover everything. I had 4 life threatening conditions but none were listed on the policy and they refused to pay out. I had to battle hard to get the pay out. Eventually it was just meningitis that I got paid out on.

As earlier poster has said you need to decide what you want it to cover. A income protection policy could be better. Depends on your circumstances.