Best income protection insurance?

Grandlygrace

Hi
I’ve recently bought a house and have been advised to take out income protection insurance. The quote my financial advisor gave me seemeda little high, so I’ve been shopping around. Can anyone recommend any good, reputable companies to consider?

My second question is, if I took out insurance just to cover my two essentials, I.e my mortgage payment plus repayment on a loan, would this impact my ability to claim state benefit? I am trying to work out if it’s best to insure myself for 75% of my gross income OR, just enough to cover the two most important things and then rely (hopefully very short term!) on the state system if I needed to.

Does anyone have any ideas? Thanks!

dunstonh

Can anyone recommend any good, reputable companies to consider?

Income protection (or permanent health insurance to give it the generic title - PHI for short) is mainly retailed via IFAs or whole of market protection advisers. Some restricted FAs/MAs have a version but it is usually expensive and sometimes of lower quality. Most comparison sites have little or no coverage of PHI. They tend to prefer to retail the PPI version (think ultra budget)

You can segment most PHI plans into a budget, standard and comprehensive split. Availability of such plans may depend on your occupation and health.

and then rely (hopefully very short term!) on the state system if I needed to.

State benefits bring you to the breadline. If you are already living on the breadline, then you are used to it and maybe PHI is not for you. However, if you earn more than that and have a lifestyle used to that, then relying on state benefits would not be ideal. Especially if you have money worries at the same time as suffering long term illness.

ACG

Why not ask your broker to try and fit in with a budget you are happy with?
That will probably mean reducing cover, extending the deferred period, maybe level cover instead of increasing and so on.

As for whether you should get the maximum possible or a reduced amount and state benefits, that is for you to decide. I think we all know that state benefits are not what they were and the likelihood of receiving it is hit and miss.

Personally, I have a small income protection policy that I took out a while back. It would probably just about cover my current Mortgage. I should increase it really but its one of those things I never get round to.

As for the best companies, it depends on what you want. Do you want cheap and cheerful, do you want the bells and whistles, do you want something in between? My policy for example, if I or my daughter gets an illness, I can send off our medical reports to one of the best doctors int he world to get a second opinion on the diagnosis and the best form of treatment. They will also pay for some treatments where it is serious enough. That costs me extra, but its a nice little thing to have.

There is no "best" as everyone is different.

I would speak to your broker and explain it is too expensive and ask if they can work to a smaller premium.

dunstonh

... just make sure the broker is not tied to one provider for insurance (many are. Especially estate agent brokers).

kidmugsy

http://monevator.com/do-you-need-income-protection-insurance/

Grandlygrace

Thanks for the help!
I just made the mistake of going through the basic health questionnaire with someone from ‘Life Search’, who I think are the outsourced medical people for several insurance companies.
Can’t believe how patronised and belittled I felt at the end of that (the person I spoke to actually tutted and sighed!). Went through the questionnaire and while I am healthy with no issues (I don’t smoke, drink only moderately), I am 2 stone overweight. I am very aware of this and keep attempting to tackle the midlife spread! My dad also had heart issues before age 60...all of which I disclosed.

The quote he gave me then more than doubled!

Maybe I’m being naive here, but surely a good proportion of the U.K. population is over their suggested BMI? Surely the price doesn’t double because of that?

Or maybe it does...and maybe I just need to eat less cheese. 😊

csgohan4

Grandlygrace wrote: »

Thanks for the help!
I just made the mistake of going through the basic health questionnaire with someone from ‘Life Search’, who I think are the outsourced medical people for several insurance companies.
Can’t believe how patronised and belittled I felt at the end of that (the person I spoke to actually tutted and sighed!). Went through the questionnaire and while I am healthy with no issues (I don’t smoke, drink only moderately), I am 2 stone overweight. I am very aware of this and keep attempting to tackle the midlife spread! My dad also had heart issues before age 60...all of which I disclosed.

The quote he gave me then more than doubled!

Maybe I’m being naive here, but surely a good proportion of the U.K. population is over their suggested BMI? Surely the price doesn’t double because of that?

Or maybe it does...and maybe I just need to eat less cheese. 😊

I used lifesearch for all my policies as they were competitive, didn't have your experience.


however insurance is based on risk, if being overweight and having a cardiovascular history in your family, this increases your individual risk.


Shop around and go to other providers, your choice

Weighty1

LifeSearch are pretty good at what they do. I know, I worked there for 2-years!

Being 2-stone overweight AND having a family history of heart disease is almost always going to result in a higher premium. Insurance premiums are also normally rated on a percentage basis, the minimum increase being 25% with it then going up in 25% increments.

It may be that a different insurer would be more favourable than the one selected and maybe the adviser you spoke with should have asked at least a few health questions up front to try and manage your expectations better. Why not ask them if better terms would be available elsewhere? Or alternatively, find yourself another independent broker, tell them who you applied to and the outcome and see if they can come back with better terms.

That said, I'd expect at least a 50% loading on the premium and think it would be unrealistic for you to expect the standard premium.

Grandlygrace

Thanks for this helpful advice! Guess it’s time to seriously commit to a diet! 😊

Another quick question! Just ran a search through 3 comparison sites and was quoted a decent price through Legal and General. I didn’t click through to purchase, but they didn’t appear to be asking any health questions. I’ve got nothing to hide (I know transparency is super important if I want to actually be covered!) but are these deals any better? Not sure why they wouldn’t ask health questions?

Cheers for all your help!

Weighty1

If they aren't asking any questions it's either just an indicative quote UNTIL you get to the health questions or it's a short term income protection plan which would only pay out for a limited period, normally 12-months.

Whilst the short term plans can be useful for certain clients they are almost always inferior to the long term plans so I'd always be looking for a medically underwritten plan.

Out of interest, which insurer did you apply with via LifeSearch?

dunstonh

Just ran a search through 3 comparison sites and was quoted a decent price through Legal and General.

Comparison sites dont offer many PHI policies. Mostly the budget versions. They mostly offer PPI style. If it is PHI then their price is the initial pre-health questions pricing (known as clean pricing). You are not going to get clean pricing. On application, they would ask the questions and then you end up with a similar result.