Alternatives when you can’t get life insurance or critical illness cover.

cateuk

Whilst I can get cover, the monthly cost is way over £150 which is just way out of my budget. 

I worked with a broker and they could only find one insurer who were prepared to cover me due to close family medical history.

I was wondering if anyone had any suggestions to alternatives to life insurance and/or critical illness. I’m considering income protection instead but any recommendations on savings, investments etc. that I could use to build a lump sum (to replace my lost earnings should I fall ill, which is very likely in the next 5-10 years). 

I’d expect to be unable to work for about 2 years, my current employer would pay full pay sick pay for 6 months and then it would dramatically decrease quite quickly to just SSP. 

Any help or advice would be very much appreciated. Thank you.

tacpot12

Income protection can be good value if you defer the point at which they start to pay out. They know that most claimants will only be off work for two years or so, so if you defer for 12 months, they know they will only be paying you for about a year. But if you know you are likely to have to claim, it is unlikely that you will be able to get cost-effective cover. 

Saving your premiums into a savings account makes sense. Investing would be a gamble, so not something you want to do unless you you have a very solid cushion of savings. I would pick a well-known provider offering a good rate of interest, open and account and start saving hard asap. 

Universal Credit might give you some help if you can't save more than £16,000 before you need to take this time off.

cateuk

Thank you. I get full pay for the first six months and then half way which quickly turns to no pay, with SSP.

thanks for replying with some things to think about.

MovingForwards

You've not given any indication about the size of your mortgage, the monthly mortgage payment or how much money you do have 'spare' each month.

What you'd need to do is get the equivalent of 18 months outgoings saved, over the next 5 - 10 years.

The way I'm doing it is saving into whatever regular savers with decent interest rates I can find and buying extra food etc to fill my pantry; I always have about a year's worth of toiletries, 6 months of cleaning products etc as I tend to bulk buy.
- I'm also overpaying my mortgage and relying on death in service and pensions to clear the mortgage if I die before I've paid it off.

I've worked out my basic outgoings eg mortgage, utilities, CT, phone, annual bills and allowed for a full tank of petrol every 3 months, with a lower food budget. It took me 18 months to save 6 months of outgoings, I'm hoping to have 12 months savings by the end of this year.

cateuk

Sorry, brand new mortgage starting next week of 206k at £700 per month.

The illness is cancer and if I’m sick like my family members I’d likely be unable to work for 2 years due to treatment. I’d be paid full pay for the first six months, half pay for a few months (they can choose to extend it which is why I don’t know how long f this would last) then eventually no pay/SSP pay. So I would need to cover bills/mortgage for about 18 months.

Your answer is kinda what I was looking for. Some way to save the money to give me a lump sum to take care of all that for when it gets to half pay. I’ll do my sums and see if my budget allows enough to be saved.

I was hoping there was some recommendations for better ways to save.

user1977

cateuk said:

I was hoping there was some recommendations for better ways to save.

Given it's no longer an insurance question, you're probably better looking elsewhere on this site for saving recommendations (and ways to cut expenditure).