Critical Illness, Life Assurance or MPPI??

MichL74

I'm just about to re-mortgage and am really confused about which mortgage protection option is best. I am freelance, so effectively self-employed and live alone with no dependents. I have been offered one policy via London & Country with Scottish Widows that is Critical Illness & Life Assurance but pays out just the once. I'd appreciate any advice on this one moneysavers.

dunstonh

You dont need life cover. Permanent health insurance and CI would appear to match your need based on the limited information you have posted.

homer_j_3

It could be that they only offer insurance from say Norwich Union and if it was like the insurance I used to be tied to, it was often cheaper to tie the life cover and critical illness cover (CIC) together as the NU policy was designed to offer Life, CIC & Permnant Health Insurance (PHI) together.

As Dunston states, life cover is irrelevant for a single person with no dependents but the reason for recommendation may have been that it keeps the price down.

With you being self employed MPPI is not normally the right way to protect your income. PHI policies are what you need top be discussing with your adviser.

MichL74

Thank you for the prompt reply. I will look into health Insurance then - any recommendations? I had Meningitis 2 years ago but I don't think that'll be problem as I made a full recovery (against the odds)..... I'm 33 btw......

My main worry is protecting my mortgage payments if I were to have to take time off work. When I was ill before, I was off for 3 months and at the time my employers paid me for a month but then refused and I was SSP which doesn't even cover the weekly shop!! I have got some savings but think it would be good to have something else in place....

dunstonh

I will look into health Insurance then - any recommendations?

Just to clarify, Permanent Health Insurance (PHI) is proper income protection. It is not Private Medical Insurance (PMI).

Its impossible to recommend a provider as pricing is influenced by age, smoker, occupation, term, amount and health. Plus you have budget, standard and comprehensive levels and different providers have different definitions of how their measure inability to work.

There is often an assumption that plans are all the same but that isnt the case. Some of the cheapest plans you can get are a complete and utter waste of money. Indeed, the FSA are now investigating quote portals that list by price to see if they need further regulation as listing by price could be viewed as a recommendation without consideration of what it offers for the money.

dimbo61

hi michl-74 as you are self employed and freelance look at offset mortgages
where you can build up savings for the lean times, this is also a good place
for the TAX money till you have to pay your tax bill.
make sure you give the insurance company every single detail of your medical history as they decline around 20% of all claims and contact your GP for your medical files when you try to claim !!! IF you have say 12 months worth of income in an offset account it takes the worry away

MichL74

Ah, that's where I'm getting confused! So is PHI the same as MPPI.... I'm assuming not. I know that MPPI only pay out a maximum of 12 months and they aren't really suitable for freelancers. I will def keep up with my savings accounts for those lean times Dimbo61- I've already applied for my re-mortgage

dunstonh

So is PHI the same as MPPI.... I'm assuming not

No. PHI is proper income protection that will pay until your selected end date (typically your retirement age). It cannot be cancelled by the insurer regardless of how often you may claim (hence the permanent).

MPPI is a time limited payment protection which usually comes with a lower level of cover and will only pay for a limited period and can be cancelled by the insurer. Qualification for benefits is usually harder than PHI although you can get real budget versions of PHI which are similar to MPPI policies.

You dont see much mention of PHI compared to MPPI because PHI is harder work to set up (its underwritten at point of sale compared to MPPI which only looks at your situation if you claim). Many tied agents dont offer a PHI policy so dont need to offer it. Plus, PHI is an unusual product in that it straddles investment class regulation and protection class. It has versions of the product in both areas. Many internet quote portals are not investment authorised so dont carry the full range. Plus, many insurers dont make their PHI product available to quote portals. And given the extra work (and its relatively low commission) that doesnt fit with the quote portals cherry picking of business. They prefer to offer only MPPI as they can earn more and do less work from it.

MichL74

Really interesting..... never heard of it before but sounds much better. Will start investigating. Thank you so much dunstonh....

Retired_I.F.A.

PHI is the dogs danglers of insurances always has been alway will be imo.

Only one problem from a policyholders view though. When claiming although your GP may well say your not fit to work they can bring in their own doctor and if he says you are then tough the claim can cease.

Never known it happen myself but the same happened with a client of mine who had pemium waiver on her personal pension (pays the premium till you return to work or retire ) The company paid some Harley Street doctor a nice fat fee to come and examine her and he declared her fit to return to work. She wasn't I know for a fact, as she was my landlady at the time and I often had to help he get off the floor, she couldn't stand upright for an hour or two most days befoe falling over.

chappers

As has been said too you get what you pay for cheaper policies will have longer periods of illness before you can claim etc You need to balance this against what savings you may keep in reserve for such eventualities. Decent policies may not be cheap though particularly with your medical history, but I would say if you are self employed you should look very seriously at taking out some cover.You really need to speak to a decent IFA to make sure you get the level of cover you need.