Want to top up Income Protection - How? with what?

DerektheDonkey

Morning all

I want to top up my current Income Protection that I have had with Lloyds (Scottish Widows I think) since 1993, paying a fixed amount of £16pm  ever since. It is fine but now only pays a quarter of my take home pay.

I have spoken with Lloyds, they recognise the scheme, they recognise the scheme is actually called Income Protection, rather than any other name, although state because of its' age it can no longer be added to. I want to cover for another £800pm payment should I need it, thus taking me to £1600pm, which is more than enough for me to live on.

I consider my choices are to either discuss with Lloyds another policy to supplement the existing cover, or, seek another provider entirely. This is where I am after some advice, what would you do,  and, should it be the latter, then how? Do I seek an IFA, a Broker or get somebody off of the internet? Either of these, how do i go about it?

I recognise my premiums are going to be somewhat higher than the current £16pm for £800pm pay out I am currently covered for. i want something to get me to 60 years old, when I am content my pensions will more than cover my requirements.

About me:-

1. 53 years old, married, never smoked. No other dependants. Drink very irregularly these days but when I do I binge for the occasion.
2. Home owner, zero mortgage although considering buying a place abroad.
3. Fairly significant level of savings aside from pensions, let's say 20 years of comfortable living between us, at today's levels, should I not buy the foreign property
4. Worked full time for 37 years with just 4 months off following redundancy whilst I sought employment
5. Type 2 diabetes diagnosed at 50 years old MOT. Otherwise fit, tall, large build leading to 'slightly enhanced BMI', exercise regularly. 
6. Dad died of heart problems aged 69, sister died of brain bleed aged 29, am unsure if this has any relevance. History of family diabetes.
7. Wife works although I have told her she can give up, should she wish, in 2 years. Her salary is about 60% mine. 

I really just want to ensure that on my 'home straight' I have some sort of cover should I not for any reason be able to see out my last 7 years of work. Thank you for reading. 

Weighty1

So the most significant piece of information you've put there is that you are Type 2 diabetic.  Most insurers will automatically decline you for long-term income protection if you are diabetic.  The couple of insurers who would accept you would only do so depending on your HbA1c reading and providing there are no other significant health factors, certainly nothing heart related and provided your BMI is too much on the wrong side of healthy.  Providing you are accepted you would then expect a "loading" on the premium of around 100% so basically the originally quoted premiums would doubly in cost.  It's better to be aware of this up front since it allows you to pre-empt whether the cover would still be affordable or not.  

Depending on your occupation, having run a quick quote, if you had a policy paying out after 6-months (you didn't mention your sick pay entitlement) then you'd be looking at a premium around £50/month.  If you want a plan paying out sooner than that this it could affect the premiums significantly eg. a plan paying after 1-month would end up costing around £80-90/month.

You ideally need to speak to a specialist who knows which company would be able to offer cover and is able to check the underwriting stance with a bit more personal information to ensure they are recommending the best of the 2 options available.

HTH

tasticz

@Weighty1

Hi, If you're young say below 30 earning around £40k a year but with potential  to earn say £70k in 5 years time. can you purchase insurance based on higher amount now so to avoid higher premium should medical condition hit in the future? Is this allowed?

I understand existing claim will only be paid on existing salary.

Do you need to update job/salary details everytime you change jobs?

Probably false economy but would be good to know your thoughts

dunstonh

I want to top up my current Income Protection that I have had with Lloyds (Scottish Widows I think) since 1993, paying a fixed amount of £16pm  ever since. It is fine but now only pays a quarter of my take home pay.

In 1993, Lloyds were retailing Black Horse Life policies. These are now branded under SW.  Black Horse life closed for new business many years ago.

I have spoken with Lloyds, they recognise the scheme, they recognise the scheme is actually called Income Protection, rather than any other name, although state because of its' age it can no longer be added to.

That fits with expectation.

I consider my choices are to either discuss with Lloyds another policy to supplement the existing cover, or, seek another provider entirely. This is where I am after some advice, what would you do,  and, should it be the latter, then how? Do I seek an IFA, a Broker or get somebody off of the internet? Either of these, how do i go about it?

You should never buy from tied agents.   Its more expensive and you are stuck with their product which may not be the best available.  You have been paying over the odds for nearly 30 years.   Dont make the same mistake twice.

You should use an IFA or whole of market protection adviser.

Weighty1

tasticz said:

@Weighty1

Hi, If you're young say below 30 earning around £40k a year but with potential  to earn say £70k in 5 years time. can you purchase insurance based on higher amount now so to avoid higher premium should medical condition hit in the future? Is this allowed?

I understand existing claim will only be paid on existing salary.

Do you need to update job/salary details everytime you change jobs?

Probably false economy but would be good to know your thoughts

Many providers include "guaranteed insurability options" which enable the cover amount to be increased within certain parameters.  *Some* providers allow these GIO's to be exercised for significant salary increases (normally pay rises in excess of 10%).  There are a couple of providers L&G and Cirencester Friendly Society who allow increases to cover to be made every 3rd anniversary year without having to have had any of the usual GIO life events occur.  They can be made simply because you want to increase the cover.  There are limitations, such as Cirencester not allowing you to make an increase if you've claimed for >6weeks in the last 3-years or are currently claiming but as far as I'm aware, these 3-yearly allowable increases are the most flexible on the market.

DerektheDonkey

Weighty1 said:

So the most significant piece of information you've put there is that you are Type 2 diabetic.  Most insurers will automatically decline you for long-term income protection if you are diabetic.  The couple of insurers who would accept you would only do so depending on your HbA1c reading and providing there are no other significant health factors, certainly nothing heart related and provided your BMI is too much on the wrong side of healthy.  Providing you are accepted you would then expect a "loading" on the premium of around 100% so basically the originally quoted premiums would doubly in cost.  It's better to be aware of this up front since it allows you to pre-empt whether the cover would still be affordable or not.  

Depending on your occupation, having run a quick quote, if you had a policy paying out after 6-months (you didn't mention your sick pay entitlement) then you'd be looking at a premium around £50/month.  If you want a plan paying out sooner than that this it could affect the premiums significantly eg. a plan paying after 1-month would end up costing around £80-90/month.

You ideally need to speak to a specialist who knows which company would be able to offer cover and is able to check the underwriting stance with a bit more personal information to ensure they are recommending the best of the 2 options available.

HTH

Morning Weighty1, many thanks for such a detailed feedback, it is really appreciated. Apologies for a late response, it is currently mad at work.

I too thought the same about diabetes although it amazes me more that when I rang Lloyds about 18 months ago  to advise them of my new found diabetes that they did not appear to be bothered. I guess their thoughts being that it is something they'd only need to consider should I claim, they could not increase the premium.

For more context around me , I'm 6 foot, 15 stone and a BMI of 28.4 according to the NHS app. My blood sugar levels fluctuate and the last continuous reading I had was 11. Jog twice a week for about 1 hour and 30 minutes in total and lift some weights at home.
My confession is that I am a bit of a chocoholic, again a binge person. I can keep it out of the house but should I not do so then neither can i keep it out of mouth . I have significantly managed to kick lots of carbs over the past 6 months.. In some respects I am looking forwards to my next diabetes MOT as I think that the current state I am in is the best I'll be found moving forwards.

Relevant to the costs you kindly ran through your system, i am quite alright with those, it is what i expected, given that it is for piece of mind for just a few years. I don't see there being too many years I'd need to claim taking me up to the age of 60. My work sick pay is full pay for 6 months then half pay a further 6 months. 

Thanks again, it is really appreciated.

DerektheDonkey

dunstonh said:

I want to top up my current Income Protection that I have had with Lloyds (Scottish Widows I think) since 1993, paying a fixed amount of £16pm  ever since. It is fine but now only pays a quarter of my take home pay.

In 1993, Lloyds were retailing Black Horse Life policies. These are now branded under SW.  Black Horse life closed for new business many years ago.

I have spoken with Lloyds, they recognise the scheme, they recognise the scheme is actually called Income Protection, rather than any other name, although state because of its' age it can no longer be added to.

That fits with expectation.

I consider my choices are to either discuss with Lloyds another policy to supplement the existing cover, or, seek another provider entirely. This is where I am after some advice, what would you do,  and, should it be the latter, then how? Do I seek an IFA, a Broker or get somebody off of the internet? Either of these, how do i go about it?

You should never buy from tied agents.   Its more expensive and you are stuck with their product which may not be the best available.  You have been paying over the odds for nearly 30 years.   Dont make the same mistake twice.

You should use an IFA or whole of market protection adviser.

Morning dunstonh, Thank you for taking the time to respond and to offer guidance of my next steps.

I acknowledge Black Horse being the then policy setters, I think it was the fact that my last statement came from Scottish Widows that prompted my comment.

Between 1988 and 2008 my wife worked for Lloyds and therefore our mortgage and all other financial aspects of our life were through them. I accept we may have paid too much however at the time of our first mortgage, which did challenge us but we got through, it was that piece of mind we needed. I look at it as now being circa just 50p per day but we are covered.   However, I fully acknowledge what you say and will make that my guide moving forwards, i have read some of your advice on this forum and really appreciate all the help you give.,

Off to find an IFA that can guide. and can find a policy for me considering my diabetes. 

Thanks again, it is really appreciated.

Sandtree

DerektheDonkey said:
I too thought the same about diabetes although it amazes me more that when I rang Lloyds about 18 months ago  to advise them of my new found diabetes that they did not appear to be bothered. I guess their thoughts being that it is something they'd only need to consider should I claim, they could not increase the premium.

Assuming this is actually a PHI policy with guaranteed premiums then they wouldn't be bothered about any illness that you develop during the course of the policy that you can work through.  Premiums are fixed, or fixed + indexed inflation, from the outset and the insurer takes on the risk that either you stay fit as a horse and never make a claim or become ill shortly after the inception and they end up paying you until 60 

Weighty1

DerektheDonkey said:

Weighty1 said:

So the most significant piece of information you've put there is that you are Type 2 diabetic.  Most insurers will automatically decline you for long-term income protection if you are diabetic.  The couple of insurers who would accept you would only do so depending on your HbA1c reading and providing there are no other significant health factors, certainly nothing heart related and provided your BMI is too much on the wrong side of healthy.  Providing you are accepted you would then expect a "loading" on the premium of around 100% so basically the originally quoted premiums would doubly in cost.  It's better to be aware of this up front since it allows you to pre-empt whether the cover would still be affordable or not.  

Depending on your occupation, having run a quick quote, if you had a policy paying out after 6-months (you didn't mention your sick pay entitlement) then you'd be looking at a premium around £50/month.  If you want a plan paying out sooner than that this it could affect the premiums significantly eg. a plan paying after 1-month would end up costing around £80-90/month.

You ideally need to speak to a specialist who knows which company would be able to offer cover and is able to check the underwriting stance with a bit more personal information to ensure they are recommending the best of the 2 options available.

HTH

Morning Weighty1, many thanks for such a detailed feedback, it is really appreciated. Apologies for a late response, it is currently mad at work.

I too thought the same about diabetes although it amazes me more that when I rang Lloyds about 18 months ago  to advise them of my new found diabetes that they did not appear to be bothered. I guess their thoughts being that it is something they'd only need to consider should I claim, they could not increase the premium.

For more context around me , I'm 6 foot, 15 stone and a BMI of 28.4 according to the NHS app. My blood sugar levels fluctuate and the last continuous reading I had was 11. Jog twice a week for about 1 hour and 30 minutes in total and lift some weights at home.
My confession is that I am a bit of a chocoholic, again a binge person. I can keep it out of the house but should I not do so then neither can i keep it out of mouth . I have significantly managed to kick lots of carbs over the past 6 months.. In some respects I am looking forwards to my next diabetes MOT as I think that the current state I am in is the best I'll be found moving forwards.

Relevant to the costs you kindly ran through your system, i am quite alright with those, it is what i expected, given that it is for piece of mind for just a few years. I don't see there being too many years I'd need to claim taking me up to the age of 60. My work sick pay is full pay for 6 months then half pay a further 6 months. 

Thanks again, it is really appreciated.

Hi DTD
Absolutely no need to apologise!  As Sandtree mentions above, conditions developed after you took the plan out would be ignored since long-term income protection plans are only underwritten at the point when you apply for them.  This is what makes them such good forms of cover.  Your BMI would not be an issue for any insurer. 

In respect of your blood sugar, it's not so much the reading that you may take daily or even a weekly average but the HbA1c which is an average of a period of around 2-3 months - you'd normally only have this taken once or twice a year at your doctors surgery.  The figure you gave of 11 is either the old % scale that was used up until a few years ago or a singular reading.  If your reading is 11 on the old percentage scale then this would, unfortunately, indicate that your diabetes is poorly controlled and I'd be highly surprised if either of the 2 insurers who'd consider you would offer terms knowing this reading.  It would be worthwhile giving your surgery a call just to confirm the actual HbA1c as this is the most significant factor for being able to obtain terms.  

DerektheDonkey

Morning Weighty1, thank you, you have been a star.

Will call the doctors today and ask for an appointment for my diabetes review, I haven't heard from them for over 18 months, perhaps understandably given the pandemic..
Just for interest the 11 I mention was an average reading over 4 days. I am uncertain if it is the old measure or not but again it gives me something to discuss with the doctor.

All the best. 

Weighty1

DerektheDonkey said:

Morning Weighty1, thank you, you have been a star.

Will call the doctors today and ask for an appointment for my diabetes review, I haven't heard from them for over 18 months, perhaps understandably given the pandemic..
Just for interest the 11 I mention was an average reading over 4 days. I am uncertain if it is the old measure or not but again it gives me something to discuss with the doctor.

All the best. 

You're most welcome!
Having an up to  date review will definitely help.  Insurers would typically want you to have had a HbA1c reading within the last 12-months.

I'm actually type 1 diabetic myself so I'm surprised that you've had a 4-day average reading as I've never heard of this being done before.  I have a libre sensor which provides constant blood glucose readings and these are read in mmol/L which I expect the 11 would be so definitely better than 11 on the old % scale.