Life and critical illness am I doing it right?

oliel

Hi there  We have a couple of life insurance policies and a critical illness insurance policy as follows

All joint policies
£170k life insurance decreasing to cover mortgage to age 74 costing £67 per month
£87k life insurance covering to age 65 costing £20 per month
£75k critical illness via my husbands work costing £1095 per year £21 per week - covers about £20k for kids too.

Im just wondering A am I paying too much? and B I think we onlly covered if we get a life threatening illness or die?  C Is there a more cost effective way to do this?  Thinking might be worth extending the term of the £87k cover?

We are age 50 and 51.   - Husband Vapes 

Many Thanks

oliel

Adding it all up I'm working out its costing us £2,064 per year (£172 per month).

dunstonh

Im just wondering A am I paying too much?

Everything is relative.   I am paying more than you are.   What matters first is the needs you are trying to cover.   We would need to know more about your situation (probably to a level that is too intrusive for a discussion board) to really answer your question.

and B I think we onlly covered if we get a life threatening illness or die?

That is the what Life & CIC covers.

 C Is there a more cost effective way to do this? 

Insufficient information given by you to go on.    It also depends on what you mean be cost effective.  For example, if you moved to budget plans rather than comprehensive plans, you may save a bit of money on the premiums but if you suffer a claimable event, it may well be false economy.

Aretnap

oliel said: and B I think we onlly covered if we get a life threatening illness or die?

Life insurance pays out if you die. Some policies will also pay out if your diagnosed as terminally ill with only a short period to live.

Critical illness cover pays out of you are diagnosed as having one of a pre-defined list of conditions of specified severity. Which is not quite the same thing as a "life threatening illness" - not all life threatening illness will be in the list, and not all illnesses on the list will be necessarily be life threatening. 

Also something to be aware of is that there are common illnesses which could keep you of work for many years which will almost certainly not be covered by a critical illness policy. Two of the most obvious types are musculoskeletal problems (arthritis, back pain etc) and mental health issues (stress, anxiety, depression etc). If you want protection from that type of long term chronic illness you would need some type of income protection insurance, ideally permanent health insurance.

IdrisJazz

It's worth knowing that with joint policies cover ends with the first claim event.

So if your partner dies, and you get payouts of 170k (it will be less than this if it is mortgage protection) and 87k, you will no longer have life cover in force.

So if the above payouts do not provide enough cover for your family in the event you also passed away a few years later, then you may not have the right cover.

Your mortgage protection seems very expensive, I have to say, although it's a long time since I did quotes for your age group.

Standalone CI tends to be more expensive than combining it with life cover. However, this also means that you only get a payout on the first event. So if you have a heart attack and claim successfully, the policy ends and the life cover is no longer in force.

The CI policy you have may require premiums to increase each year. You are going to be spending over £10k on this cover over the next 10 years, which seems a lot for 75k cover (which might not even pay off your mortgage). It might be worth looking into the exact definitions to see how likely it is that you would need to claim. Conditions like "loss of limb" sound straightforward, but often are defined as "loss of two or more limbs, with at least one above the knee or elbow". So loss of a whole leg would not be covered, despite being life-changing.

Please don't take this as advice 0 just some things to think about.

dunstonh

It's worth knowing that with joint policies cover ends with the first claim event.

Unless set up as joint life, second death (as many plans in force for IHT would be)