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Short of Long Term Income Protection?
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bigalogigalo
Posts: 23 Forumite
I've been quoted to income protection until my mortgage is paid off (31 years)
And also for income protection for a max of 2 years (I have critical illness cover in place already by the way).
The shorter term was MUCH cheaper and I'm considering going for that.
My justification is that if I'm off work ill for more than 2 years, it's probably going to be something covered under the critical illness cover.
What are the thoughts of everyone here? Any advice on this matter?
Thanks in advance
And also for income protection for a max of 2 years (I have critical illness cover in place already by the way).
The shorter term was MUCH cheaper and I'm considering going for that.
My justification is that if I'm off work ill for more than 2 years, it's probably going to be something covered under the critical illness cover.
What are the thoughts of everyone here? Any advice on this matter?
Thanks in advance
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Comments
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Depression, arthritis, ME, chronic fatigue syndrome, anxiety, chronic back pain, visual impairment(but not severe enough to be classed as blind on a CI policy).
There's probably hundreds of things which could cause long term illness but aren't critical. Personally, I see long term income protection as the best product on the market. How would your standard of living be affected if you only had £88.50 ssp to live on or around £110/week incapacity benefit?0 -
Long term income protection is head and shoulders above PPI.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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To illustrate a point:
My husband spent a spell in ICU on a life support machine a number of years ago and was classified as critically ill - he could have died at any moment and was very close to it. Thankfully he didn't. But that wasn't critical illness in an insurance sense - as it was fully recoverable, as he eventually did. But insurance did pay a monthly 'income' amount that time.
He is currently poorly, but will be walking through the door, home from work at any moment, yet has a critical illness, in an insurance sense (at least we hope so once the underwriters have finished with his claim) as this is life changing.
Whilst, at the moment, I'm personally a strong advocate of critical illness cover, long term income protection covers more eventualities, for more people, than the former, as Weighty suggested. There is quite a narrow band of conditions deemed as critical illnesses (and only around 16,000 claims a year, so quite small numbers), but income protection will pay out for elective surgery, injury in an accident and unemployment, amongst many others - something in excess of 110,000 claims per year.
I would also suggest that a longer term policy has its advantages too - at the point where you start a policy, your [hopefully good] health is locked in at that time, for the life of the policy, where conditions you develop over time (high BP, diabetes, angina, kidney issues etc etc.), may render higher premiums if you start new policies at intervals - or possibly even stop you getting further cover altogether.0 -
bigalogigalo wrote: »The shorter term was MUCH cheaper and I'm considering going for that.
My justification is that if I'm off work ill for more than 2 years, it's probably going to be something covered under the critical illness cover.
The average claim is around 6-7 years on an income protection policy (which is fairly similar to the average claim on ESA).
The 2 biggest claims on income protection are Back problems and Mental health, neither of which are covered on a critical illness policy.
If cost is an issue, personally I would lean more towards full on income protection as there are no definitions as such or list of illnesses meaning it is more likely to pay out. But there is no lump sum and you have to be unable to work which is not the case with critical illness ie you could have heart surgery and be back in work within the month, where as income protection would probably not pay out for that as you would be back to work before the deferred period was up.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
Thanks for your comments all, it's really useful and definite food for thought. I'm really impressed by both the quality and quantity of responses in such a short time.
Just to be clear, I am weighing up whether or not to have IP which pays out either (short term) for a maximum of 2 years or for (long term) the 31 years I got the quote for.
The short term policy is £40 per month cheaper for me and my wife. £40 over 31 years is alot. (yes Ive shopped around). I'm trying to figure out what might keep me off work for 2+ years that wouldn't be a critical illness (thankyou weighty for your suggestions of some). And then would I be worried enough about that happening to pay the extra £40 per month.
What do you all think? What do you do for yours??0 -
What do you all think? What do you do for yours??
I see no point paying for budget PPI plans when better PHI plans are available and often not at much more cost. PPI has all sorts of issues (short term payment protection is PPI after all). PHI (permanent health insurance is the generic name) has plans you could largely put in budget, standard and comprehensive classifications. Budget ones are pretty naff (although sometimes an occupation may not give a choice). However, standard and comprehensive plans are far superior.
You should prioritise PHI over critical illness cover (CIC).I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I see no point paying for budget PPI plans when better PHI plans are available and often not at much more cost. PPI has all sorts of issues (short term payment protection is PPI after all). PHI (permanent health insurance is the generic name) has plans you could largely put in budget, standard and comprehensive classifications. Budget ones are pretty naff (although sometimes an occupation may not give a choice). However, standard and comprehensive plans are far superior.
You should prioritise PHI over critical illness cover (CIC).
Thanks for your comment.
However, I'm not looking for PPI.
I'm also not trying to decide between CIC and IP.
I'm looking for income protection. I've had two quotes on the same policy covering the same things, with the same terms. The only difference is that one will pay out for a max of two years, the other will pay out for 31 years. It's a huge difference of £40 per month. I'm trying to decide between these two.0 -
However, I'm not looking for PPI.
Its likely you are. The one/two year plans are usually PPI. They are just badged as income protection to make them sound grander than they are. And their generic name is toxic at the moment.
There are only a couple of two year non-PPI income protection plans. Barely worth the paper they are written on.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
You generally get what you pay for and income protection is not something you want to skimp on. It will bite you back in the future when you need it"It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"
G_M/ Bowlhead99 RIP0 -
bigalogigalo wrote: »I'm trying to figure out what might keep me off work for 2+ years that wouldn't be a critical illness
Bad back and mental health, arthritis,
I see your point though.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0
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