Life Insurance Cover - Levels of cover, Providers and costs - Please Help

nickpe

Hi Guys -

I've just renewed my mortgage deal and for years we haven't had any life insurance/critical illness cover - but its now something i'm going to purchase as i've reached 40 years old and feel its a responsible thing to do, for me and my small family.

I'm with Nationwide (mortgage provider) - and they have given me a quote with their recommended provider which is Legal and General.

As i've never had the cover before -  I'm mindful of wanting to strike the right balance of getting a good provider - that will give me "whatever sufficient cover is needed by most average healthy people" vs the best price / best provider.

Legal and General have quoted us £44 a month for 15 years (the amount of time left on mortgage) with £85k Initial Life Cover and £85k Initial Critical Illness Cover (£85k is the amount left oweing on the mortgage).

So my questions are - 

Does this seem like a good quote or does it seem expensive?
Are there other providers that people recommend?
Is there a possibility to search life insurance providers on places like Go Compare in the same way you can search Car Insurance Providers or House Insurance?
Is there a minimum level of cover that most people have, ie are there sometimes "add ons" to policy's that you need , that makes the cost of the Policy go up??

Any tips/help/advice is much appreciated.

Sandtree

nickpe said:

1. Does this seem like a good quote or does it seem expensive?
2. Are there other providers that people recommend?
3. Is there a possibility to search life insurance providers on places like Go Compare in the same way you can search Car Insurance Providers or House Insurance?
4. Is there a minimum level of cover that most people have, ie are there sometimes "add ons" to policy's that you need , that makes the cost of the Policy go up??

1) No knows your health history, smoker status, weight etc so cannot judge

2) I would recommend going to a whole of market advisory broker... prices are normally cheaper, they can advise you and recommend appropriate products for your needs

3) Yes, but in reality its just a broker that gets your details rather than them going to the market directly like Home and Motor (SME business insurance is the same, its a broker pretending to be an aggregator)

4) Many people buy without understanding what they are buying unfortunately. My first question would be what is your income situation if you go on long term sick with a condition not covered by a CI policy? I'd personally buy PHI/Income Protection before CI and only add the CI on after if you can afford it... most the price you've been quoted is for the CI rather than the Life cover.

nickpe

Sandtree said:

nickpe said:

1. Does this seem like a good quote or does it seem expensive?
2. Are there other providers that people recommend?
3. Is there a possibility to search life insurance providers on places like Go Compare in the same way you can search Car Insurance Providers or House Insurance?
4. Is there a minimum level of cover that most people have, ie are there sometimes "add ons" to policy's that you need , that makes the cost of the Policy go up??

1) No knows your health history, smoker status, weight etc so cannot judge

2) I would recommend going to a whole of market advisory broker... prices are normally cheaper, they can advise you and recommend appropriate products for your needs

3) Yes, but in reality its just a broker that gets your details rather than them going to the market directly like Home and Motor (SME business insurance is the same, its a broker pretending to be an aggregator)

4) Many people buy without understanding what they are buying unfortunately. My first question would be what is your income situation if you go on long term sick with a condition not covered by a CI policy? I'd personally buy PHI/Income Protection before CI and only add the CI on after if you can afford it... most the price you've been quoted is for the CI rather than the Life cover.

Thank You for this  - and I completely agree with regards to point number 4, I honestly have no idea about what levels of cover we need / will be purchasing but I do acknowledge that whatever we do buy it should be based on a personal circumstances.

In terms of personal circumstances me and wife both in good health, none smokers etc -
In terms of work situation -  when she is off work ill she only gets Statutory Sick Pay, whilst I get full pay for upto 6 month, which then drops to half pay for the 6 months afterwards.

Based on the above do you suggest Critical Illness is not necessary and is inflating the monthly premium??

dunstonh

but its now something i'm going to purchase as i've reached 40 years old and feel its a responsible thing to do, for me and my small family.

It probably would have been responsible to do it some years back.   Although you have got lucky. So, no harm.  Although the cost will now be higher as you are older.   Also, the responsible thing would not be to do just your mortgage but also consider your family protection.

I'm with Nationwide (mortgage provider) - and they have given me a quote with their recommended provider which is Legal and General.

L&G have a commercial relationship with Nationwide as sole provider.    That is usually the worst way to buy insurance (or investments/pensions etc) as you are seeing a sales rep with a single company offering.  Not options from the whole of market.

Does this seem like a good quote or does it seem expensive?

Impossible to say with limited information.   However, why CIC and not PHI?   I know tied sales reps often gloss over PHI (income protection) but in the pecking order of things, PHI is usually the better option.

Are there other providers that people recommend?

That depends on what type of plan you are after (there are budget plans, middle of the road plans and comprehensive plans).

Is there a possibility to search life insurance providers on places like Go Compare in the same way you can search Car Insurance Providers or House Insurance?

Generally, people do not do that as you have to go through the underwriting process each time.  And you get more expensive as you get older.

Is there a minimum level of cover that most people have, ie are there sometimes "add ons" to policy's that you need , that makes the cost of the Policy go up??

It doesn't sound like you have enough cover at the moment if you are only covering the mortgage.   So, in effect you are doing the next minimum after doing nothing.

Based on the above do you suggest Critical Illness is not necessary and is inflating the monthly premium??

CIC is inflating the cost as statistically, you are more likely to suffer a claim on the CIC than you are on the life assurance.

In terms of personal circumstances me and wife both in good health, none smokers etc -
In terms of work situation -  when she is off work ill she only gets Statutory Sick Pay, whilst I get full pay for upto 6 month, which then drops to half pay for the 6 months afterwards.

So, you both have an income protection shortfall.

Sandtree

You need to speak to a professional advisor, a whole of market broker will discuss through your options etc and they are paid by commission on what they sell but are still cheaper than tied agents who are often non-advisory. There are lots of regulations to ensure your needs not their commissions drive their recommendations. 

Ultimately consider all the scenarios of each going into long term sickness... how long can you survive (or better still, live) on your current arrangements and if the answer isn't until retirement then you need to either accept the risk or look to make changes of which one option is to buy PHI.

You mention life to cover the mortgage but could your both of you individually afford to live on just your own income to support yourself and your kids if one of you dies and the mortgage is paid off? Unless you both have large incomes but modest lifestyles most couldn't and so take out a level life policy too so that the Mr(s) can live, feed the kids etc for at least a few years before the money runs out.

CI... you have to understand what it does... lump sum if certain conditions at atleast a certain level and those won't change in the 15 years of the policy. I've known relatives with older policies where heart conditions needed open chest surgery to be covered but medicine had moved on and what was open chest is now keyhole and so the policy doesn't respond. On the flip side there are those that receive a payout but recover well enough to return to work and live a normal life after (and clearly these are the ones that say CI is great). Personally it'd just be a consideration as if to get it once I knew Life and PHI were sorted.