critical illness cover/life insurance/ or both? and how?

Jessie3

Hi all, 

I'm starting to think about life insurances and illness cover after witnessing a friend just go through a difficult time and now have no income etc for the children. Its been a shock and an eye opener. 

So my questions are do i need a financial advisor to find appropriate insurance?  is that the best route?
should i get critical illness cover and life insurance? or one or the other?

I know nothing about it all but when i google i get bombarded with things and i want to make sure i go with a reputable company that will actually pay out should anything happen, and obviously i want to be covered for the maximum amount of different illness's 

I just dont even know where to start, if anyone can help point me in the right direction id be grateful. 

does anyone have experience of doing it by a financial advisor, was that the best route? 

thanks in advance 

dunstonh

So my questions are do i need a financial advisor to find appropriate insurance?

No.

 is that the best route?

For some it is.  For some it isn't.  it depends on how good you can research and compare yourself.

should i get critical illness cover and life insurance? or one or the other?

The three types of insurance to consider are life assurance, income protection (Permanent health insurance to give it the old fashioned name) and Critical illness cover.

Depending on your circumstances, the order of preference will vary.    The ideal scenario, where needs include all three, is that you have all three.   However, people's budgets dont normally go that far.   So, some compromises are often needed.   Typically, the order is life assurance, PHI and then CIC.

does anyone have experience of doing it by a financial advisor, was that the best route? 

To be clear, if you do use an adviser, you should not use an FA.   You should use an IFA or a whole of market protection adviser.  FAs are restricted in their offering.  As will some protection companies.    An IFA or whole of market protection adviser can recommend from the "whole of market".

Brie

Also - have a look at what your employer might have available.  Some have life insurance via their pension scheme or as an add on.  Some also have a benefits package which can include various critical illness schemes.  

Obviously if you are self employed or move employers frequently then you'll want something that is personal to you.

Jessie3

Thanks both, thats helpful. Its so confusing online so i think i will use an advisor 

What exactly is the IFA ?   Im guessing a more advanced advisor ?

dunstonh

What exactly is the IFA ?   Im guessing a more advanced advisor ?

IFAs are independent financial advisers.   FAs are financial advisers.    IFAs are not allowed to have any restrictions on what types of product they will or will not advise on and no restrictions on any provider.      FAs have restrictions on their service.  The most typical is the providers they use.    Many FAs are limited to just one provider..   Also, typically the pricing via FAs is more expensive than IFAs.

The term IFA has a double meaning too.  You can have an IFA firm and you can have an IFA individual.    With many IFA firms, they will have dedicated insurance/mortgage advisers who are not IFAs but work for the IFA firm.     Typically, the IFA (individual) will focus on investment class business (ISAs, pensions etc).  This is because it's hard to be a jack of all trades nowadays.  

There are also firms that do not do any investment class business but only advice on mortgages and/or protection.   As long as they are whole of market for protection then they will be equally as good an option.

So, don't necessarily get hung up on the title of the individual.  As long as the firm is an IFA or whole of market for insurance, they are the two things you are looking for.

Sandtree

dunstonh said:

 is that the best route?

For some it is.  For some it isn't.  it depends on how good you can research and compare yourself.

I think it goes beyond just how good you can research if you have pre-existing medical conditions or other potential red flags. 

My insurance application via an IFA was declined by Aviva however a whole of market protection broker got the decision reversed. This wasn't about being able to compare but leveraging the brokers access to the underwriters and experience of how to frame things.

dunstonh

My insurance application via an IFA was declined by Aviva however a whole of market protection broker got the decision reversed. This wasn't about being able to compare but leveraging the brokers access to the underwriters and experience of how to frame things.

The IFA should have been on the phone to the underwriter as the protection adviser did.      Either laziness or inexperience.

This highlights the point about a jack of all trades.  Most IFAs (individuals) do very little protection work and that lack of knowledge means a protection adviser (who could be working out of an IFA firm) is often the better option.

Racky_Roo

I don't think it's that difficult you need an IFA. Start with your needs:
Do you have dependents or a partner? if no, then you don't really need life insurance as once you die your assets are sold off and left to whoever you nominate in your will. If yes, then does your work have a death in benefit policy? if yes, then is that enough to cover the mortgage etc? if no, then buy one.
Critical illness is one definitely worth considering if you and family are dependent on your income. The younger you are when you take it out, the cheaper it is. Get one where the premium costs stay the same for the life time of the policy. You then need to look at what is covered, is it the majority of illnesses? and the other thing is what is the payout % like? Some have a better payout than others.
That should narrow down what policies you want and what to look for in policies

kingstreet

Racky_Roo said:

I don't think it's that difficult you need an IFA. Start with your needs:
Do you have dependents or a partner? if no, then you don't really need life insurance as once you die your assets are sold off and left to whoever you nominate in your will. If yes, then does your work have a death in benefit policy? if yes, then is that enough to cover the mortgage etc? if no, then buy one.
Critical illness is one definitely worth considering if you and family are dependent on your income. The younger you are when you take it out, the cheaper it is. Get one where the premium costs stay the same for the life time of the policy. You then need to look at what is covered, is it the majority of illnesses? and the other thing is what is the payout % like? Some have a better payout than others.
That should narrow down what policies you want and what to look for in policies

Any reason for leaving out IP/PHI? Critical illness cover isn't income replacement and you can suffer an illness which prevents you working; but which wouldn't result in a successful CI claim.

dunstonh

Critical illness is one definitely worth considering if you and family are dependent on your income. 

Surely PHI is a better option than CIC in that scenario?

Get one where the premium costs stay the same for the life time of the policy. 

Although, having indexation may be better if its a long term policy.

Jessie3

thank you for all the replies and wow its confusing ! 

I will definitely get an advisor as I don't think id be able to work it all out on my own ....