Life insurance / Critical illness cover

Timothy_Richards

Hi,

I'm a bit confused on how these two differ. Is one preferable to the other?

I'm 51 and am back in work again after many years unemployed (ill health due to a mental health condition - now managed and not causing any problems).

Are there any good brokers who can advise?

Sorry this is a bit vague, but I'm new to looking into this.

Thanks, Tim

DullGreyGuy

Timothy_Richards said:

Hi,

I'm a bit confused on how these two differ. Is one preferable to the other?

I'm 51 and am back in work again after many years unemployed (ill health due to a mental health condition - now managed and not causing any problems).

Are there any good brokers who can advise?

Sorry this is a bit vague, but I'm new to looking into this.

Thanks, Tim

Traditional life insurance - pays out a lump sum if you die before the end of the policy

Life insurance inc terminal illness - as above plus also pays out if you get a prognosis of less than 12 months to live and you arent in the last year of your policy. 

Critical Illness - pays out if you get a critical illness as defined in the policy (normally a long list) at the specified severity. Doesnt payout if you die in an accident, doesnt payout if your illness isnt on their list etc. 

Life is fairly cheap, if you buy CI its often minimal or no extra cost to include life insurance as you are much more likely to become ill before you're X years old than die.


There is another one thats not on your list which is Permanent Health Insurance, a form of income protection. This pays out a monthly sum whilst you are too ill to work, it doesnt mater the cause of the illness or injury (mainly). 


It really depends on your situation and what risks you are concerned about, CI is ok but can mean you are ill with something not covered and so how do you pay your mortgage/rent etc? PHI is good because you are guaranteed an income. CI however can payout on something thats serious but short lived, and as its a lump sum sometimes people change their lifestyle having had a health scare and the lump sum enables that whereas PHI stops paying when you are fit to return to work