Life insurance

Intel1982

Hi,

We currently have life insurance with critical illness cover and income protection for my husband. We took out the policies ten years ago when we were renting, had a low income and had no children. 

We're now moving into a new build property and the mortgage is much higher, we have two children and my husband is now on a reasonably high income. We are also on benefits as I am full time carer for our two disabled children. 

Our mortgage broker has given us some quotes for increased life insurance, critical illness and income protection - is it worthwhile taking this out? Is income protection worth it if we are on benefits? Thanks. 

tacpot12

Income protection is worth it, even if you are on benefits. The benefits system won't pay your mortgage if your husband can't work. Having the income protection increases the chances that you will be able to keep your home if if he can't work. 

You should check to see if the existing income protection policy can be extended more cheaply. Income protection insurance is cheaper if you have a very  long deferred period (i.e. it doesn't pay out until he has been ill for a long time). Because of his entitlement to sick pay, you can safely defer the income protection for 6 months, and can defer it for longer (e.g. 12 months) if you can save enough to cover six months of living expenses. This should reduce the cost of this valuable cover. 

Critical Illness Cover is less important. I have it, but I'm not sure what the benefit of a lump sum is when diagnosed with the critical illness. You will need to decide this for yourselves.