Life Insurance and CIC

Noobie2011

Hi all,

Thought I would ask for some advice although I know Life cover etc is not an exact science.

We are currently looking at switching our Life cover to this new Vitality as it allows you to gains benefits etc depending on how healthy you are and what fitness you do but it is hard to know what the right level of cover is as it is something you do not want to short change yourself on. Below is some details of us and what we are looking at so any advice or things we are missing would be appreciated.

Current Quote - Joint Policy

Life Cover(Fixed) - £195k
Sis/Cic cover(Fixed) - £125k paying out on a % scale depending on your illness. All critical is 100% payout and they cover 145 condition ranging from serious to critical

House

Mortgage: £260k
Outstanding to bank: £193k
HTB: £52k - only 6 months in to the 5 years before paying back as standard
Equity: 15k
Current deal: Halifax 2.18% on 2 year fixed

Me

Wage: 31k
Death in service with work at 4 x Salary
Sick pay: 4 weeks in 1st 2 years then 6 months after that. Currently been there 1 year
Income Protection: Is mentioned in my benefits but just investigating what I get or have to pay etc
Pension: Contribute 5% and company 7%. Not sure if this has any bearing

Wife

Wage: 49k
Death in service with work at 5 x Salary
Sick pay:17 weeks
Income Protection: Not an option I dont think
Pension: Contribute 5% and company 5%. Not sure if this has any bearing

Also do not plan to have kids so no dependants hence a joint policy as only covering the surviving person and not needing anything to go to anyone else so think this is the right option but happy to be challenged.

We have some Debts like car finance, credit card, overdraft etc probably totalling around 20k so was not sure if woukd need to consider that in the cover.

So the main question is around the Sis/Cic as setting the life cover to include the mortgage outstanding was the idea.

But for Sis/Cic how do people work it out. We have looked at it and said if either of us was out of work permanent due to Cic then could one wage support us with what we know now. Our conclusion was if we maybe paid the debts off then yes we could survive fine. Also for any none Ctitical Ilness and with the sick pay we get we also determined we would be able to manage fine and have time to make any adjustments needed. Of course this is all based on what we knkw now as there are so many things that can happen you could not check everything.

So we are thinking the high level of Critical we may not need or feel it is worth it for the extra cost and therefore maybe lower it down to under 50k say which would allow us to get our finances in order to cope with just one wage if needed.

The other factor is the HTB which is a moving target.

Any help appreciated

Weighty1

These are all issues that you should be discussing with a broker or the Vitality rep, if you're taking it from them directly.

Personally, I'd say income protection is far better than SIC or CIC as it ensures there's money coming through the door if you're ill. Presumably, you are in a position to manage debt repayment if now so it doesn't really matter if you can't repay the debt immediately if you suffer a CIC, as along as the income continues.

CIC/SIC is more of a "nice to have" whereas I'd say IP is a necessity.

Noobie2011

Weighty1 wrote: »

These are all issues that you should be discussing with a broker or the Vitality rep, if you're taking it from them directly.

Personally, I'd say income protection is far better than SIC or CIC as it ensures there's money coming through the door if you're ill. Presumably, you are in a position to manage debt repayment if now so it doesn't really matter if you can't repay the debt immediately if you suffer a CIC, as along as the income continues.

CIC/SIC is more of a "nice to have" whereas I'd say IP is a necessity.

Yeah we have discussed a lot with the Vitality person and also family/friends to see what they do so we can understand it more.

Yes I saw something about Income Protection but dont think the Vitality guy mentioned it. If they dont do this is it something we can get separate. I mean my work mentions Income Protection so an looking into that also but yes a set sone of income every month does sound better than a lump sun paid put which may be costing you more to maintain

csgohan4

a broker will have a look at the whole market and find the best one for you in terms of income protection.

If you can afford it CIC is nice to have but a luxury IMO and expensive for what it is, I used the premiums to top up my income protection.

Weighty1

Noobie2011 wrote: »

Yeah we have discussed a lot with the Vitality person and also family/friends to see what they do so we can understand it more.

Yes I saw something about Income Protection but dont think the Vitality guy mentioned it. If they dont do this is it something we can get separate. I mean my work mentions Income Protection so an looking into that also but yes a set sone of income every month does sound better than a lump sun paid put which may be costing you more to maintain

Vitality DO offer income protection but probably focus more on SIC as that is a "sexier" product ie. "oh look, we cover 150 conditions and other companies only cover 40-55".

It's definitely worth checking with your employer about income protection as there's little point in paying for a plan privately if you are covered through work.

In regards to asking family/friends...........DON'T!! They aren't qualified to advise you in an appropriate way and most family/friends don't have enough or adequate cover themselves, let alone the ability to recommend the right levels for other people.

Noobie2011

Weighty1 wrote: »

Vitality DO offer income protection but probably focus more on SIC as that is a "sexier" product ie. "oh look, we cover 150 conditions and other companies only cover 40-55".

It's definitely worth checking with your employer about income protection as there's little point in paying for a plan privately if you are covered through work.

In regards to asking family/friends...........DON'T!! They aren't qualified to advise you in an appropriate way and most family/friends don't have enough or adequate cover themselves, let alone the ability to recommend the right levels for other people.

Yeah I get what you mean on that and have heard it is easier to sell and better commision sometines.

Yeah both checking our work first as makes sense

I get what you mean as I now know of certain friends/family that dont have CIC and none mentione Income Protection.

I just saw it on vitality so went on and did a joint quick quote and just stuck in an amount of my full wage after tax times 25 years and came back with £49 which is a lot less than the SiC quote we got for £125k for 25 years. Think once I confirm if get it through work or not I will call the Vitailty guy up

Weighty1

Noobie2011 wrote: »

Yeah I get what you mean on that and have heard it is easier to sell and better commision sometines.

Yeah both checking our work first as makes sense

I get what you mean as I now know of certain friends/family that dont have CIC and none mentione Income Protection.

I just saw it on vitality so went on and did a joint quick quote and just stuck in an amount of my full wage after tax times 25 years and came back with £49 which is a lot less than the SiC quote we got for £125k for 25 years. Think once I confirm if get it through work or not I will call the Vitailty guy up

Why not deal with a whole of market broker?

In some instances Vitality can be well priced but in other instances they can be quite expensive and you'd have no way of comparing if you speak directly to one of their reps. Also, be aware that a lot of Vitality options can increase in price, specifically their Wellness and Vitality Optimiser options so they may start off as good value but won't necessarily stay that way unless you incorporate the health living programme into your lifestyle or have the bi-annual medical. It's also worth noting that their freebies can change. In the past it used to be far easier to get the free Starbucks and cinema tickets and you used to be able to get far more of then. the cashback was also higher and easier to achieve than it is now.

In short, buy the right plan for you based on it having the right core benefits, not the fact that it might provide a free apple watch.

csgohan4

Don't choose vitality just because of the perks as well, Look through the gimmicks and see if it is the right product for you

dunstonh

Yes I saw something about Income Protection but dont think the Vitality guy mentioned it.

Tied sales rep will only talk about their products. Not those available elsewhere. Picking CIC over PHI is easier to sell even though logically, PHI is better in most cases. A proper adviser from the whole of market will give better advice.

Noobie2011

Weighty1 wrote: »

Why not deal with a whole of market broker?

In some instances Vitality can be well priced but in other instances they can be quite expensive and you'd have no way of comparing if you speak directly to one of their reps. Also, be aware that a lot of Vitality options can increase in price, specifically their Wellness and Vitality Optimiser options so they may start off as good value but won't necessarily stay that way unless you incorporate the health living programme into your lifestyle or have the bi-annual medical. It's also worth noting that their freebies can change. In the past it used to be far easier to get the free Starbucks and cinema tickets and you used to be able to get far more of then. the cashback was also higher and easier to achieve than it is now.

In short, buy the right plan for you based on it having the right core benefits, not the fact that it might provide a free apple watch.

Yeah we may do now but it was not for the apple watch but more the fact they linked rewards with health activity so depending what level we are we could get benefits/discounts etc

Noobie2011

So a bit of an update and just wanted to check leople did not think I was taking a huge risk here as that is what the guy at vitality is saying to me.

My benefits have work have renewed and we are now offered extra options as below with the costs so feels to me I may not need any extra protection as this covers everything and more. The only risk this way is my benefits are tied to my job so if leave I would need to sort separate cover if my new place of work did not offer anything or as much as opposed to separate life cover etc which follows you no matter where you work. But my view is that is just another whatif and my view is you get the cover you need for the circumstances you know.

Death in Service: Now gave us an option to increase to 8 times salary so can get cover through work for £260k for £6 a month

New CI through work: Now offer cover up to £160k(more that what Vitality were quoting for) and costing me £28 a month

Income Protection: Get free 75% cover of my wage which would be enough to manage our current lifestyle if we paid off a few debts but says cover is for max 5 years

So the above to me means my wife is covered if I have issues apart from the IP woukd run out after 5 years but pkenty of time to readjust our finances.

In regards for my cover if my wife is ill her Death in Service covers the mortgage and more so would be looking at getting IP on her policy for what I need if she is out of work and a small amoubt of CIC potentially to pay a few debts so my wage would cover our finances.

I know I need to go through a broker to discuss etc but the vitality guy was very blunt in saying using your work cover in this way is very risky

Thanks in advance for advice