Insurance Help

mikeywills

Hi there,

My wife and I currently have separate life insurance and separate critical illness insurance. The combined total for the 4 comes to just under £65.00 per month. My wife and I are both non smokers in our early thirties. We have had these policies since we first got a mortgage about 8 years ago, but I am not sure whether we are actually get the best outcome for our outlay.

What I would like to have, is a policy which would cover our mortgage £120K if either party died, to have cover if one of us became unable to work through either loss of job or disability, sufficient to cover our salaries pa approx £30k, through to retirement. I know that our current arrangement does not cover loss of job so I would like some advise as to how we could maximise the protection without having too many policies running alonside each other.

Are the two policies we have at present overkill, and whether a PHI would be a beneficial addition or alternative cover. I appreciate I am not putting too much info on our personal situation so the advise would be purely subjective, any comment though would be greatfully received.

Thanks Mike

lisyloo

My view has always been that PHI is much better than CI.
The problem with CI is that it covers only certain illnesses whereas PHI covers you if you can't work so that would be pretty much any illness plus accidents (apart from a few exceptions like self harm for example).
PHI also gives you an income until retirement which could be a few decades.
CI gives you a lump sum which may be OK for a modifying your home or getting treatment but no good for providing an income for 30 years.

So I would certainly consider changing CI to PHI.

I would also advise checking what cover you have via your employer and/or your pension. My employer provides free PHI.

Also bear in mind that if one of you dies before retirement then your private pension funds will pay out a lump sum and/or pensions to your dependents.
This could be significant if you started a pension 10 years ago.

mikeywills

Hi lisyloo,

my wife is a teacher so has a local government pension, I do not think this pays out and I am fairly certain there is not a PHI attached to it. The company I work for do not run a pension scheme so I have cash isa's set aside as my pension.

lisyloo

my wife is a teacher so has a local government pension, I do not think this pays out

So you think widows, widowers and children are left with nothing !!
That doesn't sound right to me, so I'd definitely check to make sure.

so I have cash isa's set aside as my pension

Ok, so your wife would have access to this money if you died as it's no longer needed for your pension.

dunstonh

The teachers scheme does contain some sickness benefits, death in service and dependents pension. Its not enough by itself for most people but its not bad.

Trying to find a single policy that does everything you want is possible but it is unlikely to be the best thing to do. It wont be the cheapest as the best PHI provider is different to the best CI provider who in turn is different to the best life assurance provider. Plus by the time you take into account all the variables that impact on price you would end up compromising on something.