How much serious illness cover to take out?

Troy_af

Hello.


I'm looking to buy my first home and have been advised to take out serious illness cover and life cover. I'm trying to do a little research to find out whether or not this is worth taking out and if so how much, or if income protection would be better.

First off I don't see why I need life cover as I am buying alone and have no dependants, is that correct?

Serious illness cover makes sense, but at £30/month it sounds quite expensive. Is there the option of paying a smaller premium, even if this does mean your payout would be smaller in the event of a claim?

Also, if you take out the cover are you able to change it or cancel it at a later date? For example what if I took out serious illness for the amount to protect my mortgage but in 5 years time I no longer need the same size of cover, could I reduce it or cancel it completely, or is it more of a long term contract.

Just trying to get an idea of what is best, as its hard to completely trust advisors at times when I know they're getting huge commission when selling this kind of stuff to me,

Thanks.

dunstonh

have been advised to take out serious illness cover and life cover.

What type of plan is being referred to as serious illness cover. That is not generic name but is used by a couple of providers, including one that is not very good at all.

First off I don't see why I need life cover as I am buying alone and have no dependants, is that correct?

In simple terms, yes. However, if you are buying critical illness cover, then its worth including it as its often only pennies difference in price.

if so how much, or if income protection would be better.

Income protection (in the proper permanent health insurance form) usually trumps CIC in the pecking order.

However, often many mortgage brokers with a limited panel or even single tied provider dont have an income protection product available or if they do, its not very good. Or get lazy and go with CIC as its easier.

Also, if you take out the cover are you able to change it or cancel it at a later date?

Change: Not normally. It would usually require a new plan. Although there are caveats to that with some plan types.

Cancel: whenever you like.

Just trying to get an idea of what is best, as its hard to completely trust advisors at times when I know they're getting huge commission when selling this kind of stuff to me,

Do not use an FA or restricted mortgage adviser. These are the sales rep types to avoid. Use an IFA or whole of market protection adviser. Many will offer fee basis and use the commission to equal the fee. Therefore removing any potential bias you may perceive.

Weighty1

As above, first and foremost you'd probably be better off looking at long term income protection as this ensures you've got money coming through the door no matter the reason why you are signed off work.

Someone recommending either Serious Illness Cover or Critical Illness Cover, without discussing Income Protection is simply being lazy and try to make an easier sale as these are "sexier" products than IP.

Troy_af

dunstonh wrote: »

What type of plan is being referred to as serious illness cover. That is not generic name but is used by a couple of providers, including one that is not very good at all.

Type of plan? I'm not sure all I know is that it's called serious illness cover with vitality 4 life.

Troy_af

And that it's a decreasing cover type which cost around 20 per month.

Weighty1

Troy_af wrote: »

And that it's a decreasing cover type which cost around 20 per month.

You need to be aware that VitalityLife have several different plans on the market. Some of them are "Optimised". This means they are discounted up front but if you don't keep up with their Health and Wellbeing programme or if you don't have the annual medical the premiums can increase.

They'll probably have told you there are certain freebies which you can accrue, however, these are all subject to change and over the last few years things like the free cinema tickets, cashback and free coffees have all become much harder to claim.

Troy_af

Weighty1 wrote: »

You need to be aware that VitalityLife have several different plans on the market. Some of them are "Optimised". This means they are discounted up front but if you don't keep up with their Health and Wellbeing programme or if you don't have the annual medical the premiums can increase.

They'll probably have told you there are certain freebies which you can accrue, however, these are all subject to change and over the last few years things like the free cinema tickets, cashback and free coffees have all become much harder to claim.

Is this what is meant by the bronze and platinum statuses? Bronze is £25 per month rising to £50 per month near the end of the term, whereas platinum stays at £25 for life?


It just sounds like a rip off, it says the total amount ill pay over the term would add up to £12,000. Yet how slim are the chances that I will ever claim?

Weighty1

It's not a rip off, it's insurance. The thing is plenty of people do claim, you often don't hear of them though because they are either dead or seriously ill and not walking around shouting out about their plans paying out.

There are plenty of plans which have guaranteed premiums. It's all very well VitalityLife offering these discounted premiums but if circumstances change and inhibit your ability to keep up with their programme you are penalised. Personally, I prefer to know what I'm paying year in year out.

Again, I'd go back to Income Protection. This plan maximises the chance of you claiming because it will cover any illness/injury which prevents you from undertaking the duties of your own occupation, NOT just a list of very specific conditions.

dunstonh

It just sounds like a rip off, it says the total amount ill pay over the term would add up to £12,000. Yet how slim are the chances that I will ever claim?

Its not a rip off. Plenty of claims get paid out daily. They do what they say they do.

Vitality is a niche provider. It targets those with a "healthy" lifestyle. However, it is not suited to those with aspirations of a healthy lifestyle who do not follow up on their commitments. For people like that, traditional term assurance is more suitable with its guaranteed premiums. No gimmicks. no complications. Boring and simple but does the job required.