Life/ critical illness insurance

jdsimmons3

Hi everyone. Were buying our first home and are making sure we get all the right cover we need.

So far we have decided on income protection for my Husband in the event he becomes too Ill to go to work. This will pay 80% of his wage

Also life insurance for him. This is to pay a lump sum in the event of death. were taking out at 209,000 mortgage together so we will choose a £200,000 pay out to cover this.

I won't be getting any cover as I don't take in a lot of income and we could just about manage without my wage.

Now I'm confused with the addition of critical illness cover. we have income protection in the event if my husband does get Ill and cannot work. I think it pays out for 24months but I will double check!

And if he passes away we get the life insurance pay out. So is the critical illness cover worth it? I'm confused wether I need this if I have income protection? If he dies from a critical illness will the life insurance cover not pay out?

jdsimmons3

jdsimmons3 said:

Hi everyone. Were buying our first home and are making sure we get all the right cover we need.

So far we have decided on income protection for my Husband in the event he becomes too Ill to go to work. This will pay 80% of his wage

Also life insurance for him. This is to pay a lump sum in the event of death. were taking out at 209,000 mortgage together so we will choose a £200,000 pay out to cover this.

I won't be getting any cover as I don't take in a lot of income and we could just about manage without my wage.

Now I'm confused with the addition of critical illness cover. we have income protection in the event if my husband does get Ill and cannot work. I think it pays out for 24months but I will double check!

And if he passes away we get the life insurance pay out. So is the critical illness cover worth it? I'm confused wether I need this if I have income protection? If he dies from a critical illness will the life insurance cover not pay out?

So it £75 a month without critical illness cover! Is 200,000 too much to pay out! I have no idea? I thought to cover the mortgage that would make sense

csgohan4

critical illness  pays out when you have one of the illness the insurer defines as critical

Life insurance will usually pay on death pending, assuming full disclosure of conditions on starting the policy at the time. 


If your your not sure  if you need certain protection, I would advise getting a whole of the market broker to sit down and discuss your needs. Worst thing is DIY only to find it's the wrong policy or doesnt cover you

jdsimmons3

csgohan4 said:

critical illness  pays out when you have one of the illness the insurer defines as critical

If your your not sure  if you need certain protection, I would advise getting a whole of the market broker to sit down and discuss your needs. Worst thing is DIY only to find it's the wrong policy or doesnt cover you

So the illness I read as example stroke/ dementia. If my other half got those and died them we wouldn't get any parent without critical illness cover? That just doesn't seem fair? Surely death is death ! I think I will have to call or sit down with a broker as it all very confusing!

Aretnap

jdsimmons3 said:

csgohan4 said:

critical illness  pays out when you have one of the illness the insurer defines as critical

If your your not sure  if you need certain protection, I would advise getting a whole of the market broker to sit down and discuss your needs. Worst thing is DIY only to find it's the wrong policy or doesnt cover you

So the illness I read as example stroke/ dementia. If my other half got those and died them we wouldn't get any parent without critical illness cover? That just doesn't seem fair? Surely death is death ! I think I will have to call or sit down with a broker as it all very confusing!

No, death is death. Life insurance policies pay out on death, regardless of the cause of death, sometimes with a very small number of exceptions like suicide in the first year of the policy.

Some life insurance policies will also payout if you're diagnosed as having only a short time to live - again regardless of the reason.

Critical illness insurance is generally entirely separate to life insurance, and will pay out if you are diagnosed as having one of a predefined list of conditions of predefined severity - regardess of whether it is terminal or not.

You could have a heart attack, recover, be back at work in a couple of months, live for another 30 years, and get a whopping big payout from your CI cover. Or you could be crippled with arthritis and be left unable to work for the last 20 years of your working life - but not get a penny from CI cover because arthritis isn't on the list of critical illnesses. So CI cover has it's uses, but it's not a substitute for a god income protection policy which will replace your income if you're unable to work, regardless of the reason.

jdsimmons3 said:

So it £75 a month without critical illness cover! Is 200,000 too much to pay out! I have no idea? I thought to cover the mortgage that would make sense

If your husband died you would still have other bills to pay besides the mortgage - could you afford to pay them yourself? If you would struggle, you should consider upping your level of cover.

jdsimmons3 said:

 we have income protection in the event if my husband does get Ill and cannot work. I think it pays out for 24months but I will double check!

If you're buying your first house you're what - in your 30s? So if your husband was unable to work permanently, how would you pay for the other 30-ish years until he reaches retirement age?

Income protection comes in two flavours - the basic policies that pay out for a maximum of 12 or 24 months, and the full fat version (also known as permanent health insurance) which will pay out for as long as you are unable to work - potentially until retirement age. The latter is more expensive for obvious reasons, but it provides a lot more security.

jdsimmons3 said:

I won't be getting any cover as I don't take in a lot of income and we could just about manage without my wage.

Would there be an indirect impact on your husbands finances though? For example do you have children and do you do most of the childcare? If you dies would he have to reduce his hours and/or pay a lot more for childcare? These are things worth considering when you think about whether to insure your own life.

jdsimmons3

Aretnap said:

jdsimmons3 said:

csgohan4 said:

critical illness  pays out when you have one of the illness the insurer defines as critical

If your your not sure  if you need certain protection, I would advise getting a whole of the market broker to sit down and discuss your needs. Worst thing is DIY only to find it's the wrong policy or doesnt cover you

So the illness I read as example stroke/ dementia. If my other half got those and died them we wouldn't get any parent without critical illness cover? That just doesn't seem fair? Surely death is death ! I think I will have to call or sit down with a broker as it all very confusing!

No, death is death. Life insurance policies pay out on death, regardless of the cause of death, sometimes with a very small number of exceptions like suicide in the first year of the policy.

Some life insurance policies will also payout if you're diagnosed as having only a short time to live - again regardless of the reason.

Critical illness insurance is generally entirely separate to life insurance, and will pay out if you are diagnosed as having one of a predefined list of conditions of predefined severity - regardess of whether it is terminal or not.

You could have a heart attack, recover, be back at work in a couple of months, live for another 30 years, and get a whopping big payout from your CI cover. Or you could be crippled with arthritis and be left unable to work for the last 20 years of your working life - but not get a penny from CI cover because arthritis isn't on the list of critical illnesses. So CI cover has it's uses, but it's not a substitute for a god income protection policy which will replace your income if you're unable to work, regardless of the reason.

jdsimmons3 said:

So it £75 a month without critical illness cover! Is 200,000 too much to pay out! I have no idea? I thought to cover the mortgage that would make sense

If your husband died you would still have other bills to pay besides the mortgage - could you afford to pay them yourself? If you would struggle, you should consider upping your level of cover.

jdsimmons3 said:

 we have income protection in the event if my husband does get Ill and cannot work. I think it pays out for 24months but I will double check!

If you're buying your first house you're what - in your 30s? So if your husband was unable to work permanently, how would you pay for the other 30-ish years until he reaches retirement age?

Income protection comes in two flavours - the basic policies that pay out for a maximum of 12 or 24 months, and the full fat version (also known as permanent health insurance) which will pay out for as long as you are unable to work - potentially until retirement age. The latter is more expensive for obvious reasons, but it provides a lot more security.

jdsimmons3 said:

I won't be getting any cover as I don't take in a lot of income and we could just about manage without my wage.

Would there be an indirect impact on your husbands finances though? For example do you have children and do you do most of the childcare? If you dies would he have to reduce his hours and/or pay a lot more for childcare? These are things worth considering when you think about whether to insure your own life.

Thank you for all your answers!

I've been doing quotes and for the extra cost its worth doing my own life insurance! Only a few £ more a month so would be worth it to make his life less stressful. For context I'm 25, he is 35, both in good health. we have a child too which is the reason we want to make sure we get everything right!

If my other half couldn't return to work after 24months I feel with the income protection helping us for 2years would give me enough time to figure out a way to bring in the extra income. I started a business recently and also have a part time job. I'd imagine my income will double by next year as it's going well. We're saving all profit at the moment so we will have those savings to fall back on if ever needed. I'd also look at remortgaging for a smaller property worst case scenario. We have good family support also. It's a lot to think about as there are so many scenarios to consider!

dunstonh

If my other half couldn't return to work after 24months I feel with the income protection helping us for 2years would give me enough time to figure out a way to bring in the extra income. I started a business recently and also have a part time job.

That sounds like you are looking at payment protection insurance (PPI) that is being marketed as income protection rather than proper income protection (known as permanent health insurance).     PPI is a budget option with really budget coverage.   You should really consider the PHI version.

jdsimmons3

dunstonh said:

If my other half couldn't return to work after 24months I feel with the income protection helping us for 2years would give me enough time to figure out a way to bring in the extra income. I started a business recently and also have a part time job.

That sounds like you are looking at payment protection insurance (PPI) that is being marketed as income protection rather than proper income protection (known as permanent health insurance).     PPI is a budget option with really budget coverage.   You should really consider the PHI version.

Thank you. I will look into this!

Sandtree

jdsimmons3 said:

Aretnap said:

jdsimmons3 said:

csgohan4 said:

critical illness  pays out when you have one of the illness the insurer defines as critical

If your your not sure  if you need certain protection, I would advise getting a whole of the market broker to sit down and discuss your needs. Worst thing is DIY only to find it's the wrong policy or doesnt cover you

So the illness I read as example stroke/ dementia. If my other half got those and died them we wouldn't get any parent without critical illness cover? That just doesn't seem fair? Surely death is death ! I think I will have to call or sit down with a broker as it all very confusing!

No, death is death. Life insurance policies pay out on death, regardless of the cause of death, sometimes with a very small number of exceptions like suicide in the first year of the policy.

Some life insurance policies will also payout if you're diagnosed as having only a short time to live - again regardless of the reason.

Critical illness insurance is generally entirely separate to life insurance, and will pay out if you are diagnosed as having one of a predefined list of conditions of predefined severity - regardess of whether it is terminal or not.

You could have a heart attack, recover, be back at work in a couple of months, live for another 30 years, and get a whopping big payout from your CI cover. Or you could be crippled with arthritis and be left unable to work for the last 20 years of your working life - but not get a penny from CI cover because arthritis isn't on the list of critical illnesses. So CI cover has it's uses, but it's not a substitute for a god income protection policy which will replace your income if you're unable to work, regardless of the reason.

jdsimmons3 said:

So it £75 a month without critical illness cover! Is 200,000 too much to pay out! I have no idea? I thought to cover the mortgage that would make sense

If your husband died you would still have other bills to pay besides the mortgage - could you afford to pay them yourself? If you would struggle, you should consider upping your level of cover.

jdsimmons3 said:

 we have income protection in the event if my husband does get Ill and cannot work. I think it pays out for 24months but I will double check!

If you're buying your first house you're what - in your 30s? So if your husband was unable to work permanently, how would you pay for the other 30-ish years until he reaches retirement age?

Income protection comes in two flavours - the basic policies that pay out for a maximum of 12 or 24 months, and the full fat version (also known as permanent health insurance) which will pay out for as long as you are unable to work - potentially until retirement age. The latter is more expensive for obvious reasons, but it provides a lot more security.

jdsimmons3 said:

I won't be getting any cover as I don't take in a lot of income and we could just about manage without my wage.

Would there be an indirect impact on your husbands finances though? For example do you have children and do you do most of the childcare? If you dies would he have to reduce his hours and/or pay a lot more for childcare? These are things worth considering when you think about whether to insure your own life.

Thank you for all your answers!

I've been doing quotes and for the extra cost its worth doing my own life insurance! Only a few £ more a month so would be worth it to make his life less stressful. For context I'm 25, he is 35, both in good health. we have a child too which is the reason we want to make sure we get everything right!

If my other half couldn't return to work after 24months I feel with the income protection helping us for 2years would give me enough time to figure out a way to bring in the extra income. I started a business recently and also have a part time job. I'd imagine my income will double by next year as it's going well. We're saving all profit at the moment so we will have those savings to fall back on if ever needed. I'd also look at remortgaging for a smaller property worst case scenario. We have good family support also. It's a lot to think about as there are so many scenarios to consider!

The other consideration with ASU/PPI, the flavour of Income Protection you are considering, is that it is an annual policy and so premiums will increase each year as he gets older and can see drastic increases at times... look on here and you;ll see many found their premiums increased 5 fold after Covid or the insurer simply refused to offer a renewal.

PHI, the full fat version is a type of long term insurance and so you can lock the insurer and price in until the planned retirement date (but that comes at a price)

dunstonh

..plus the PPI version can be cancelled by the insurer.   The PHI version cannot be cancelled by the insurer, which is how it got its name Permanent Health Insurance.    The name is a bit old fashioned and comes from the era when marketing was not so in-your-face.   Such as Section 226 Retirement Annuity Contracts. (the equivalent of personal pensions today).   But if you want income protection, then PHI is the way to go.

newkitchenfund

jdsimmons3 said:

Aretnap said:

jdsimmons3 said:

csgohan4 said:

critical illness  pays out when you have one of the illness the insurer defines as critical

If your your not sure  if you need certain protection, I would advise getting a whole of the market broker to sit down and discuss your needs. Worst thing is DIY only to find it's the wrong policy or doesnt cover you

So the illness I read as example stroke/ dementia. If my other half got those and died them we wouldn't get any parent without critical illness cover? That just doesn't seem fair? Surely death is death ! I think I will have to call or sit down with a broker as it all very confusing!

No, death is death. Life insurance policies pay out on death, regardless of the cause of death, sometimes with a very small number of exceptions like suicide in the first year of the policy.

Some life insurance policies will also payout if you're diagnosed as having only a short time to live - again regardless of the reason.

Critical illness insurance is generally entirely separate to life insurance, and will pay out if you are diagnosed as having one of a predefined list of conditions of predefined severity - regardess of whether it is terminal or not.

You could have a heart attack, recover, be back at work in a couple of months, live for another 30 years, and get a whopping big payout from your CI cover. Or you could be crippled with arthritis and be left unable to work for the last 20 years of your working life - but not get a penny from CI cover because arthritis isn't on the list of critical illnesses. So CI cover has it's uses, but it's not a substitute for a god income protection policy which will replace your income if you're unable to work, regardless of the reason.

jdsimmons3 said:

So it £75 a month without critical illness cover! Is 200,000 too much to pay out! I have no idea? I thought to cover the mortgage that would make sense

If your husband died you would still have other bills to pay besides the mortgage - could you afford to pay them yourself? If you would struggle, you should consider upping your level of cover.

jdsimmons3 said:

 we have income protection in the event if my husband does get Ill and cannot work. I think it pays out for 24months but I will double check!

If you're buying your first house you're what - in your 30s? So if your husband was unable to work permanently, how would you pay for the other 30-ish years until he reaches retirement age?

Income protection comes in two flavours - the basic policies that pay out for a maximum of 12 or 24 months, and the full fat version (also known as permanent health insurance) which will pay out for as long as you are unable to work - potentially until retirement age. The latter is more expensive for obvious reasons, but it provides a lot more security.

jdsimmons3 said:

I won't be getting any cover as I don't take in a lot of income and we could just about manage without my wage.

Would there be an indirect impact on your husbands finances though? For example do you have children and do you do most of the childcare? If you dies would he have to reduce his hours and/or pay a lot more for childcare? These are things worth considering when you think about whether to insure your own life.

Thank you for all your answers!

I've been doing quotes and for the extra cost its worth doing my own life insurance! Only a few £ more a month so would be worth it to make his life less stressful. For context I'm 25, he is 35, both in good health. we have a child too which is the reason we want to make sure we get everything right!

If my other half couldn't return to work after 24months I feel with the income protection helping us for 2years would give me enough time to figure out a way to bring in the extra income. I started a business recently and also have a part time job. I'd imagine my income will double by next year as it's going well. We're saving all profit at the moment so we will have those savings to fall back on if ever needed. I'd also look at remortgaging for a smaller property worst case scenario. We have good family support also. It's a lot to think about as there are so many scenarios to consider!

I would definitely recommend that you also get life insurance, even though your own income is small, as you have a child and are presumably the main caregiver. If you were to die, your husband would need to either drastically cut his working hours or pay for childcare of some kind, either of which would have a huge impact on his finances.