income protection

dannyjebb

Hi

We have recently had an offer accepted on our first home and looking at insurance for helping pay bills and life insurance if the worst happens.

We have a 1 year old, both work for the NHS and in the NHS pension scheme. We get 6 months full pay sickness then 6 half pay, Unless its something particularly bad I can't imagine what would keep us off work for more than 6 months. Our pension also includes a lump sum payment on death of 2 x annual salary (which would be about £52k payment for each of us) as well as similar arrangements for serious illness, stroke, heart attack, cancer. our mortgage is for 170k.

so far we have thought the following,

income protection insurance for £1250 a month would be about £60 per month for us both on a policy that lasted until we retired. Interestingly this doesn't increase with inflation, so in 30 years £1250 is unlikely to reflect a large part of our wages as it does at present and more importantly cover our bills.

Life insurance for 100k each, (the 100k + 50k from pension life assurance) would cover most of our mortgage. which would be the main asset we wanted covering.

I would be interested what kind of insurance others have to protect their monthly income? I know £1250 a month now would cover everything now, but if I had a serious accident next week and couldn't work again, in 25 years time £1250 wouldn't be a good enough amount.

Many thanks

dunstonh

income protection insurance for £1250 a month would be about £60 per month for us both on a policy that lasted until we retired. Interestingly this doesn't increase with inflation, so in 30 years £1250 is unlikely to reflect a large part of our wages as it does at present and more importantly cover our bills.

You get the choice when you buy the insurance whether you want level or indexed cover.

I would be interested what kind of insurance others have to protect their monthly income?

Permanent Health Insurance (PHI) is the logical option for most. It can be supplemented with critical illness cover for lump sums.

dannyjebb

Thanks, I spoke with an independant financial advisor yesterday who went through some policies, I asked about if the monthly payment we would receive increased with inflation and he said no. didnt mention any option where this happens either

tom2205

There are several providers that offer income that increases at 3%, 5% or RPI that are indexed at the point of if a claim is made so could just be the providers that that adviser is tied to aren't as comprehensive.

dunstonh

dannyjebb wrote: »

Thanks, I spoke with an independant financial advisor yesterday who went through some policies, I asked about if the monthly payment we would receive increased with inflation and he said no. didnt mention any option where this happens either

That would suggest that the IFA does not have whole of market access on insurance. This is confusing as IFA refers to investment class business. Not insurance. So, whilst an IFA is whole of market on investment class, they are allowed to restrict on insurance. Although most panels available allow the IFA to go off panel if there is not a suitable product that meets the needs.