Critical Illness Insurance or Income Protection

Silverum

Hello - I am looking for some opinions here if possible.

We currently have critical illness and life cover up to the value of our mortgage and this decreases as the term of our mortgage decreases. We are just in the process of re-mortgaging and will have a larger mortgage. I was planning to increase our critical illness cover to be for the amount of our new mortgage but the mortgage adviser is also offering income protection insurance which would cover us for more reasons for being off work, lesser reasons than critical illness and would pay a monthly amount to us.

I think I still prefer the idea of being able to pay off the mortgage if one of us was seriously ill but I wondered what the general consensus was and whether one is always thought to be better than the other.

Thanks!

dunstonh

Critical Illness Insurance or Income Protection

Both is the normal recommendation. Subject to budget. If budget is an issue, I would prioritise PHI (the best form of income protection) above CIC. However, I would not prioritise PPI (budget payment protection) above either of the others.

but the mortgage adviser is also offering income protection insurance which would cover us for more reasons for being off work, lesser reasons than critical illness and would pay a monthly amount to us.

Income protection is a term that captures several product types and varying degrees of quality. A budget income protection plan can be next to useless but the cost difference between quality and budget may not be that big.

If your mortgage adviser is whole of market for insurances (and not just mortgages - care here as a lot of mortgage brokers are tied to one company. L&G being the most common) then they should recommend the best within your budget. If your mortgage broker is tied then they can only recommend what they have in their product range.

csgohan4

if you have the money, get both Critical illness and income protection, otherwise I would pile into the Income protection IMO

Life assurance is a no brainer if you have dependents

Weighty1

What happens if the condition you are diagnosed with prevents you from working long term but isn't listed as a "critical illness"?

Whilst it can sound attractive having the mortgage paid off in full the purpose of arranging insurance is to maintain the same lifestyle that you have now if a claimable event arise. In that manner long term income is generally the better option as it has broader coverage than just a list of the most serious conditions.

As said above, if you can afford both then that would be the best case scenario.

Aretnap

Weighty1 wrote: »

What happens if the condition you are diagnosed with prevents you from working long term but isn't listed as a "critical illness"?

And just to push that point further, perhaps the two most common reasons why people are off work long term are not the "dramatic" illnesses which are covered by critical illness cover, but more "mundane" things. (1) Mental health issues - stress, anxiety, depression etc and (2) musculoskeletal problems - back pain, joint problems, arthritis etc. Neither would get you a penny under a critical illness policy, but PHI would mean that you were able to maintain your lifestyle (or something close to it) until you were able to return to work (or until you reached retirement age).