Protections

Ybe

If you already have income protection (half your salary for 2 years and a lump sum ant the end of the 2 years of three times your salary) and life assurance from your employer, what protections should one consider for a mortgage? Would it just be buildings and contents insurance? 

Brie

def go for buildings and contents cover.  many mortgages will say you must have the building cover to ensure the bank's asset is protected.  

I also got life assurance on a declining payout for our mortgage.  That was set up over the period it was intended to pay the mortgage and was not dependent on continuing with any one employer.  It also meant that should the worst happen the OH would have the lump sum from the employer's protection but have no mortgage to pay.   

Ybe

Brie said:

def go for buildings and contents cover.  many mortgages will say you must have the building cover to ensure the bank's asset is protected.  

I also got life assurance on a declining payout for our mortgage.  That was set up over the period it was intended to pay the mortgage and was not dependent on continuing with any one employer.  It also meant that should the worst happen the OH would have the lump sum from the employer's protection but have no mortgage to pay.   

Thanks. I know there’s also unemployment cover but stand-alone unemployment cover seems to be non existent so not sure if it’s worth getting income protection just for that. 

Brie

It would depend on how employable someone is, where they live (so possible opportunities), whether they would move for a job, age, marital status, obligations to children/parents.....

We didn't get unemployment cover as it would have been too expensive for OH due to employment history and chosen profession.  I didn't consider it necessary as I've never been out of work for very long (3 or 4 months in the last 30 years).  

YBR

For a time I had a policy that paid out should my DH be incapacitated - like unemployment cover, but not based on his income (he was a stay-at-home parent) but on what it would cost to "replace" what he does with wrap-around care for the kids. 
You will probably need an adviser to find it rather than comparison websites.

Ybe

So would contents cover and a lifetime income protection policy with payout starting after 180 days be sufficient?

ACG

Its impossible to say. 
How long is your sick pay and how much is your sick pay?  Some people have statutory sick pay other people have 12 months full pay, most people fall somewhere in between. Its normal to tailor an income protection policy to your sick pay, but not always done due to cost. 

Ybe

ACG said:

Its impossible to say. 
How long is your sick pay and how much is your sick pay?  Some people have statutory sick pay other people have 12 months full pay, most people fall somewhere in between. It’s normal to tailor an income protection policy to your sick pay, but not always done due to cost. 

I get six months on full pay. After that, I get group income protection which pays half my salary for 2 years and then after that, if I’m no longer able to work, a lump sum of 3 times my salary. 

ACG

What percentage of your income does the group policy pay? 
Your sick pay is very unusual. But at most I would say you may only need a top up after 180 days (as you are already in receipt of some sick pay, but you might not even need that). 

I think the highest deferred period you can get is 104 weeks, which means you are likely to be over insured for a 6 month period. There is nothing wrong with this other than the fact you will be paying for something you are unlikely to claim on for a few months.

You are actually quite well covered. I think the average claim varies from insurer but is around 5-8 years, so your sick pay covers quite a big chunk of that which is pretty good. 

Ybe

ACG said:

What percentage of your income does the group policy pay? 
Your sick pay is very unusual. But at most I would say you may only need a top up after 180 days (as you are already in receipt of some sick pay, but you might not even need that). 

I think the highest deferred period you can get is 104 weeks, which means you are likely to be over insured for a 6 month period. There is nothing wrong with this other than the fact you will be paying for something you are unlikely to claim on for a few months.

You are actually quite well covered. I think the average claim varies from insurer but is around 5-8 years, so your sick pay covers quite a big chunk of that which is pretty good. 

The group policy pays 50% of income for 2 years. Then a lump sum. I’ve been told it’s quite likely I wouldn’t be able to claim on the group policy and an income protection policy at the same time.  

So really I only need it for the point after that 2 years has elapsed if I’m not able to work for longer than that. 

ACG

Some policies go up to around 60-65% of income, but it sounds like you should be looking for a policy was a 2 year deferred period. There are not too many of them around but there are a few providers. I cant recall who they are off the top of my head, but I think if you have a broker they should be able to find those insurers within 10 minutes. Its not a big job.