Income protection and critical illness insurance/s

caldi9

Happy new year,

We are looking to get an income protection and critical illness insurance/s, and potentially life insurance.

- What are the most important factors to watch out for? We know how insurances try not to pay.

- Is it better to get a combined insurance that covers both income protection and critical illness (and potentially life insurance on top) or rather separate insurances?

- Is it better to get an insurance as married couple or individually?

Thank you

lisyloo

Critical illness will only for certain conditions.
For income protection make sure it covers your job vs any job e.g. will hedge fund manager be expected to work in a supermarket?
deferred period (the period where you can’t claim) is important for income protection.

why do you think you need critical illness as well as income protection?
i mean it’s ideal but expensive and most people go for a smaller trade-off.
if your income is covered why do you need a CI payout?

do you have children?
do either of you have any employment benefits?
do you have any DC pensions that would give you a lump sum if you die?

you will probably find you need to get insurances individually due to different medical/age etc.

what you are proposing is going to be expensive, so look at what you already have (employment, pensions) already.

my partner would be minted with a large pension fund and half a house but I’m in my 50s.
you may have less but it’s certainly worth considering.

caldi9

Thanks, in case of having an income protection insurance only and a critical illness former seems obsolete, hence the idea of having both CI and income protection insurances or having a life insurance and an income protection insurance.

Is is better to combine income protection and life insurances?

Having compared income protection insurances only, I am surprised about how short the benefit periods are (1-2 years). What if an illness is severe and prevents you from doing the job that you have done previously? 1-2 years of cover are way too short in that instance.

dunstonh

- What are the most important factors to watch out for? We know how insurances try not to pay.

Life assurance pays out in over 99% of claims.  CIC pays out in over 95% of claims.   PHI is a bit lower but that is largely because people claim for things not covered. Often because they went with a budget version of PHI rather than comprehensive one.

- Is it better to get a combined insurance that covers both income protection and critical illness (and potentially life insurance on top) or rather separate insurances?

In most cases no.    To have a provider that is best in all three is unusual.    You end up having to compromise.  However, it can largely depend on what type of cover you are after.   Linking CIC and life assurance does often make sense though.

- Is it better to get an insurance as married couple or individually?

You cover the financial need.  For some people that will mean joint cover is needed.  For others it will mean single life or a combination.

Thanks, in case of having an income protection insurance only and a critical illness former seems obsolete, hence the idea of having both CI and income protection insurances or having a life insurance and an income protection insurance.

Having both gives you optimium cover but it will be expensive.  If you need to restrict due to budget then focus more on the PHI side rather than the CIC side.

Having compared income protection insurances only, I am surprised about how short the benefit periods are (1-2 years). 

That is the PPI and not PHI.  PHI goes to your selected end age (typically retirement).

PHI (permanent health insurance) was the only type of income protection.  It is the best type but you can classify the plans available into budget, standard and comprehensive levels of cover.  That is not an official grading but just a way to help you realise that all plans are not the same and there is a wide range available.   Some marketers decided that permanent health insurance was not a consumer friendly name and started referring to it solely as income protection.    

Over the last decade, with PPI becoming a dirty name, some providers rebranded their PPI as income protection as well.    
PPI is not underwritten at point of sale either.  It is at point of claim (unlike PHI which is point of sale).   

Basically, you have PPI at the bottom of the pile and then PHI at the top but graded across the different versions.   

. What if an illness is severe and prevents you from doing the job that you have done previously? 1-2 years of cover are way too short in that instance.

That is what proper income protection (PHI) covers you for.  Not PPI.

caldi9

dunstonh said:

- What are the most important factors to watch out for? We know how insurances try not to pay.

Life assurance pays out in over 99% of claims.  CIC pays out in over 95% of claims.   PHI is a bit lower but that is largely because people claim for things not covered. Often because they went with a budget version of PHI rather than comprehensive one.

- Is it better to get a combined insurance that covers both income protection and critical illness (and potentially life insurance on top) or rather separate insurances?

In most cases no.    To have a provider that is best in all three is unusual.    You end up having to compromise.  However, it can largely depend on what type of cover you are after.   Linking CIC and life assurance does often make sense though.

- Is it better to get an insurance as married couple or individually?

You cover the financial need.  For some people that will mean joint cover is needed.  For others it will mean single life or a combination.

Thanks, in case of having an income protection insurance only and a critical illness former seems obsolete, hence the idea of having both CI and income protection insurances or having a life insurance and an income protection insurance.

Having both gives you optimium cover but it will be expensive.  If you need to restrict due to budget then focus more on the PHI side rather than the CIC side.

Having compared income protection insurances only, I am surprised about how short the benefit periods are (1-2 years). 

That is the PPI and not PHI.  PHI goes to your selected end age (typically retirement).

PHI (permanent health insurance) was the only type of income protection.  It is the best type but you can classify the plans available into budget, standard and comprehensive levels of cover.  That is not an official grading but just a way to help you realise that all plans are not the same and there is a wide range available.   Some marketers decided that permanent health insurance was not a consumer friendly name and started referring to it solely as income protection.    

Over the last decade, with PPI becoming a dirty name, some providers rebranded their PPI as income protection as well.    
PPI is not underwritten at point of sale either.  It is at point of claim (unlike PHI which is point of sale).   

Basically, you have PPI at the bottom of the pile and then PHI at the top but graded across the different versions.   

. What if an illness is severe and prevents you from doing the job that you have done previously? 1-2 years of cover are way too short in that instance.

That is what proper income protection (PHI) covers you for.  Not PPI.

Thanks.

Just to make sure: I have PHI, but was looking to add income protection / critical illness / life insurance. While I understand PHI may cover the health related costs, the income falls away in case of a severe illness. Aren't there longer lasting income protection insurances?

I wonder what the approach tends to be, combining CIC and PHI or life and PHI? Does it make a big difference cost-wise?

kaMelo

caldi9 said:

dunstonh said:

- What are the most important factors to watch out for? We know how insurances try not to pay.

Life assurance pays out in over 99% of claims.  CIC pays out in over 95% of claims.   PHI is a bit lower but that is largely because people claim for things not covered. Often because they went with a budget version of PHI rather than comprehensive one.

- Is it better to get a combined insurance that covers both income protection and critical illness (and potentially life insurance on top) or rather separate insurances?

In most cases no.    To have a provider that is best in all three is unusual.    You end up having to compromise.  However, it can largely depend on what type of cover you are after.   Linking CIC and life assurance does often make sense though.

- Is it better to get an insurance as married couple or individually?

You cover the financial need.  For some people that will mean joint cover is needed.  For others it will mean single life or a combination.

Thanks, in case of having an income protection insurance only and a critical illness former seems obsolete, hence the idea of having both CI and income protection insurances or having a life insurance and an income protection insurance.

Having both gives you optimium cover but it will be expensive.  If you need to restrict due to budget then focus more on the PHI side rather than the CIC side.

Having compared income protection insurances only, I am surprised about how short the benefit periods are (1-2 years). 

That is the PPI and not PHI.  PHI goes to your selected end age (typically retirement).

PHI (permanent health insurance) was the only type of income protection.  It is the best type but you can classify the plans available into budget, standard and comprehensive levels of cover.  That is not an official grading but just a way to help you realise that all plans are not the same and there is a wide range available.   Some marketers decided that permanent health insurance was not a consumer friendly name and started referring to it solely as income protection.    

Over the last decade, with PPI becoming a dirty name, some providers rebranded their PPI as income protection as well.    
PPI is not underwritten at point of sale either.  It is at point of claim (unlike PHI which is point of sale).   

Basically, you have PPI at the bottom of the pile and then PHI at the top but graded across the different versions.   

. What if an illness is severe and prevents you from doing the job that you have done previously? 1-2 years of cover are way too short in that instance.

That is what proper income protection (PHI) covers you for.  Not PPI.

Thanks.

Just to make sure: I have PHI, but was looking to add income protection / critical illness / life insurance. While I understand PHI may cover the health related costs, the income falls away in case of a severe illness. Aren't there longer lasting income protection insurances?

I wonder what the approach tends to be, combining CIC and PHI or life and PHI? Does it make a big difference cost-wise?

Yes, there are the usual 1,2 and 5 year policies but there are also those that offer cover that pays out up until SPA although obviously they are considerably more expensive and the premiums increase as you get older too.

lisyloo

caldi9 said:

dunstonh said:

- What are the most important factors to watch out for? We know how insurances try not to pay.

Life assurance pays out in over 99% of claims.  CIC pays out in over 95% of claims.   PHI is a bit lower but that is largely because people claim for things not covered. Often because they went with a budget version of PHI rather than comprehensive one.

- Is it better to get a combined insurance that covers both income protection and critical illness (and potentially life insurance on top) or rather separate insurances?

In most cases no.    To have a provider that is best in all three is unusual.    You end up having to compromise.  However, it can largely depend on what type of cover you are after.   Linking CIC and life assurance does often make sense though.

- Is it better to get an insurance as married couple or individually?

You cover the financial need.  For some people that will mean joint cover is needed.  For others it will mean single life or a combination.

Thanks, in case of having an income protection insurance only and a critical illness former seems obsolete, hence the idea of having both CI and income protection insurances or having a life insurance and an income protection insurance.

Having both gives you optimium cover but it will be expensive.  If you need to restrict due to budget then focus more on the PHI side rather than the CIC side.

Having compared income protection insurances only, I am surprised about how short the benefit periods are (1-2 years). 

That is the PPI and not PHI.  PHI goes to your selected end age (typically retirement).

PHI (permanent health insurance) was the only type of income protection.  It is the best type but you can classify the plans available into budget, standard and comprehensive levels of cover.  That is not an official grading but just a way to help you realise that all plans are not the same and there is a wide range available.   Some marketers decided that permanent health insurance was not a consumer friendly name and started referring to it solely as income protection.    

Over the last decade, with PPI becoming a dirty name, some providers rebranded their PPI as income protection as well.    
PPI is not underwritten at point of sale either.  It is at point of claim (unlike PHI which is point of sale).   

Basically, you have PPI at the bottom of the pile and then PHI at the top but graded across the different versions.   

. What if an illness is severe and prevents you from doing the job that you have done previously? 1-2 years of cover are way too short in that instance.

That is what proper income protection (PHI) covers you for.  Not PPI.

Thanks.

Just to make sure: I have PHI, but was looking to add income protection / critical illness / life insurance. While I understand PHI may cover the health related costs, the income falls away in case of a severe illness. Aren't there longer lasting income protection insurances?

I wonder what the approach tends to be, combining CIC and PHI or life and PHI? Does it make a big difference cost-wise?

Confused. Do you mean PMI? (For medical).
otherwise what do you mean by PHI vs income protection (aren’t they the same).

firstly I think you need to start with your financial need.
an important question is do you have kids - because that implies a need for childcare and one parent cannot work and do childcare.

wrt life insurance - what do you want it for?
if you have no kids and one of you dies can’t the other sell up and move on or get a lodger? Or is this for one person to stay in the home mortgage free?

personally I think you need to take step back and work out what you want/need and also what you have.
do either of you have ANY pension funds at all?
whats your sick pay?
whats your savings?

once you have all the info you can see where the gap is in cover.

you do realise CI only covers certain illnesses? Whereas pHI covers the risk of not being able to work?
so if you get an illness that isn’t “critical” e.g. “bad back” then you won’t be able to make a CI claim.
CI can provide for treatment, bucket list, house alterations, but isn’t really suitable for income,.

i think you need to take a step back and work out need.
then compare with what you have - benefits, pension, savings etc. And work out the gap.

Btw - pension funds may be available if you die or have less than 12 months to live.

Brie

things may have changed or this may be just the company that we are with but do check out the difference between covered as individuals or a couple.  

We have a policy as a couple which was based on us 20 years back.  The premium for me is quoted separately but linked to that of my OH.  And while I'm a couple of years older, OH is a smoker so my premium is a 10th of his.  But when he stopped about 5 years into the policy they were willing to revamp the policy for us which would have made his portion smaller but mine significantly higher meaning we would have paid more per month than leaving it as it was.  So we left it.  

Which reminds me I think I need to contact them to find out how things stand now - might just cancel the whole thing in the next year as the point was to pay off the mortgage which is fairly minor now.  

lisyloo

Brie said:

things may have changed or this may be just the company that we are with but do check out the difference between covered as individuals or a couple.  

We have a policy as a couple which was based on us 20 years back.  The premium for me is quoted separately but linked to that of my OH.  And while I'm a couple of years older, OH is a smoker so my premium is a 10th of his.  But when he stopped about 5 years into the policy they were willing to revamp the policy for us which would have made his portion smaller but mine significantly higher meaning we would have paid more per month than leaving it as it was.  So we left it.  

Which reminds me I think I need to contact them to find out how things stand now - might just cancel the whole thing in the next year as the point was to pay off the mortgage which is fairly minor now.  

If you are a male/female couple you might have been affected by European legislation that came in that said premiums have to be same for both genders.

Brie

Oh and side note.....if you have children you no longer support....

When my parents got to that age they cancelled their life insurance and instead paid for income protection policies for us kids.  I've never needed to claim but one brother "lucked out" when he had an accident that paralysed his arm.  The insurance company paid him full salary for 2 years while he was deemed to be unemployable as it was his right arm.  No one considered it significant that for him this was actually just a major inconvenience rather than a tragedy as he's left handed.  And fortunately it was something that 90% repaired itself with time.

caldi9

lisyloo said:

caldi9 said:

dunstonh said:

- What are the most important factors to watch out for? We know how insurances try not to pay.

Life assurance pays out in over 99% of claims.  CIC pays out in over 95% of claims.   PHI is a bit lower but that is largely because people claim for things not covered. Often because they went with a budget version of PHI rather than comprehensive one.

- Is it better to get a combined insurance that covers both income protection and critical illness (and potentially life insurance on top) or rather separate insurances?

In most cases no.    To have a provider that is best in all three is unusual.    You end up having to compromise.  However, it can largely depend on what type of cover you are after.   Linking CIC and life assurance does often make sense though.

- Is it better to get an insurance as married couple or individually?

You cover the financial need.  For some people that will mean joint cover is needed.  For others it will mean single life or a combination.

Thanks, in case of having an income protection insurance only and a critical illness former seems obsolete, hence the idea of having both CI and income protection insurances or having a life insurance and an income protection insurance.

Having both gives you optimium cover but it will be expensive.  If you need to restrict due to budget then focus more on the PHI side rather than the CIC side.

Having compared income protection insurances only, I am surprised about how short the benefit periods are (1-2 years). 

That is the PPI and not PHI.  PHI goes to your selected end age (typically retirement).

PHI (permanent health insurance) was the only type of income protection.  It is the best type but you can classify the plans available into budget, standard and comprehensive levels of cover.  That is not an official grading but just a way to help you realise that all plans are not the same and there is a wide range available.   Some marketers decided that permanent health insurance was not a consumer friendly name and started referring to it solely as income protection.    

Over the last decade, with PPI becoming a dirty name, some providers rebranded their PPI as income protection as well.    
PPI is not underwritten at point of sale either.  It is at point of claim (unlike PHI which is point of sale).   

Basically, you have PPI at the bottom of the pile and then PHI at the top but graded across the different versions.   

. What if an illness is severe and prevents you from doing the job that you have done previously? 1-2 years of cover are way too short in that instance.

That is what proper income protection (PHI) covers you for.  Not PPI.

Thanks.

Just to make sure: I have PHI, but was looking to add income protection / critical illness / life insurance. While I understand PHI may cover the health related costs, the income falls away in case of a severe illness. Aren't there longer lasting income protection insurances?

I wonder what the approach tends to be, combining CIC and PHI or life and PHI? Does it make a big difference cost-wise?

Confused. Do you mean PMI? (For medical).
otherwise what do you mean by PHI vs income protection (aren’t they the same).

firstly I think you need to start with your financial need.
an important question is do you have kids - because that implies a need for childcare and one parent cannot work and do childcare.

wrt life insurance - what do you want it for?
if you have no kids and one of you dies can’t the other sell up and move on or get a lodger? Or is this for one person to stay in the home mortgage free?

personally I think you need to take step back and work out what you want/need and also what you have.
do either of you have ANY pension funds at all?
whats your sick pay?
whats your savings?

once you have all the info you can see where the gap is in cover.

you do realise CI only covers certain illnesses? Whereas pHI covers the risk of not being able to work?
so if you get an illness that isn’t “critical” e.g. “bad back” then you won’t be able to make a CI claim.
CI can provide for treatment, bucket list, house alterations, but isn’t really suitable for income,.

i think you need to take a step back and work out need.
then compare with what you have - benefits, pension, savings etc. And work out the gap.

Btw - pension funds may be available if you die or have less than 12 months to live.

Thanks.

Isn't PMI and PHI the same?

We have private health insurances and are looking for a longer-term income protection insurance at reasonable costs, in case I cannot work due to an illness/accident etc. If those do not exist beyond 1-2 years, question is if they are actually of any use.

I do not want to eat up savings and investments, in case an illness etc. would prevent me from doing my current profession.

If it makes sense, I will add a life or critical illness insurance.