Life Insurance / Income Protection / Critical Illness

kingstreet

wishinghome said:

kingstreet said: 

Family Income Benefit would offer better value and would more closely meet a family protection need than a lump sum.

Thank you. We'll look in to that and think about what would work for us better in terms of life insurance; a lump sum or monthly payments. 

If you work out that on death you would lose a net income of £x each month for y years (until youngest child reaches 21, or until retirement etc) you can quantify the need and the period it will exist. You can build in indexation to beat inflation. Level term assurance is like using a shotgun; FIB is the rifle with the telescopic sight.

wishinghome

Thanks so much for your input everyone. I have one more related question if anyone can help please. On the paperwork for our solicitor it asks "will you be assigning any life policies or other policies to a lender?" I'm not sure what that means - can anyone shed any light? Do we have to assign our life insurance to the mortgage lender or would that only be if we take out a life insurance or other policy that is to be paid directly to the lender to clear the mortgage?

dunstonh

On the paperwork for our solicitor it asks "will you be assigning any life policies or other policies to a lender?" I'm not sure what that means - can anyone shed any light?

A very rare requirement nowadays.  Tends to only be required on commercial borrowing and niche cases.

 Do we have to assign our life insurance to the mortgage lender or would that only be if we take out a life insurance or other policy that is to be paid directly to the lender to clear the mortgage?

Only if the lender asks.  The majority do not for normal mortgages.

wishinghome

That's great, thank you. 

User4search

I have life insurance from work but due to my underline health condition I could not get other life cover out side of work so it is better to take critical cover and life cover outside of work when you are fit and healthy:). I have consulted a financial protection advisor for free who has guided me on how can I get different types of insurances with good deals from different providers.  It would be down to your personal circumstances also. I now have critical illness cover , life cover out side of work plus income protection cover . I did not take mortgage protection cover as I have already taken life cover.  I have also purchased a house this year. Due to pendamic now I have got my Will created and have opened a trust account also .  Know I am too young to have will but I thought it would be better to have  in current world.  If you need any more details let me know . Ta

wishinghome

Thanks again to everyone who offered advice/suggestions on this. To update, the husband contacted work and it turns out he is already in the group insurance scheme which is good news but a bit embarrassing that we didn't realise! He must have signed up for it when he first joined a decade ago and forgot about it! So this covers life assurance worth a lump sum just over 3x his salary, personal accident benefits, legal expenses insurance (family cover - children over 18) and counselling service (also family cover children over 18). I can be added to the scheme for just under £4 a month and this gets me life assurance a little over 3x my salary (I don't get the personal accident benefits) so that definitely seems worth doing. 

So we're thinking we'd still like to get FIB as well but for a lower amount because we get a lump sum through the group insurance. Plus we'll get the PHI with 12 month deferment for income protection. We're undecided on the critical illness and I think it may come down to how much extra it would cost us to add that in.

We're thinking of contacting an IFA to arrange the additional cover, would you recommend this? Does it work out cheaper/more expensive/the same rather than trying to do it ourselves?

Sandtree

PHI in particular is most commonly sold via either IFAs or Protection Brokers ("protection" is the slightly odd collective name often given for these types of policies). Whilst PHI is its technical name its often marketed as "income protection" however there is another product, correctly known as ASU or PPI, that also markets itself as Income Protection. Most direct sales of IP is ASU rather PHI and they are very different beasts.

Personally, I had a better response from a broker than an IFA (he was more interested about what my pension situation was) and so I'd tend towards a "whole of market advisory broker" and especially if you've got medical conditions etc that may make things more tricky/expensive. 

dunstonh

Personally, I had a better response from a broker than an IFA (he was more interested about what my pension situation was) and so I'd tend towards a "whole of market advisory broker" and especially if you've got medical conditions etc that may make things more tricky/expensive. 

Nowadays, the advice market has seen IFAs (individuals) need to focus more on their core areas which is mainly investment class.   And you tend to find IFA (firms) will more often have dedicate in-house protection advisers and mortgage advisers (very often mortgage and protection combined).   It's harder to be a jack of all trades today compared to 10-20 years ago.  Some are but it can often show up in their knowledge and they fit the stereotype jack of all trades, master of none.

I wouldn't buy my mortgages via an IFA (individual) although an IFA (firm) using dedicated mortgage brokers would be fine.  The same applies to protection unless its simple cases.

wishinghome

Thank you both. We'll look to contact a broker.

User4search

wishinghome said:

Thank you both. We'll look to contact a broker.

I know 2 good brokers who assisted me for most of all my financial protection matter. Let me know if you want to get details