Mortgage critical illness

Hugbubble

Am posting here as the Insurance board doesn't seem to get much traffic- apologies if in the wrong.

Currently purchasing property. As naive FTB, would welcome advice/ opinion. Obviously planning on getting life insurance/ assurance but our mortgage broker (who also does insurance) is suggesting we get decreasing term critical illness cover too to cover the mortgage. I am dubious as to its worth (especially as it is expensive).

I'd welcome peoples thoughts.

dunstonh

I am dubious as to its worth (especially as it is expensive).

You wont be dubious if you need to claim. Statistically its around 1 in 6 chance of having a claimable event before retirement. Its second to life cover at 1 in 5.

snarffie

Hugbubble wrote: »

Am posting here as the Insurance board doesn't seem to get much traffic- apologies if in the wrong.

Currently purchasing property. As naive FTB, would welcome advice/ opinion. Obviously planning on getting life insurance/ assurance but our mortgage broker (who also does insurance) is suggesting we get decreasing term critical illness cover too to cover the mortgage. I am dubious as to its worth (especially as it is expensive).

I'd welcome peoples thoughts.

Critical illness cover is a difficult one as it is expensive, and can be difficult/impossible to claim if you have pre-existing conditions. Private Medical is another expensive one. As with all non-compulsory insurances, you have to balance the amount security you want against the cost. Unfortunately, you are the only one who can decide this.

For example, we decided that redundancy cover was pointless as it only pays out for a year and usually doesn't pay out for the first moth or so. I now also have some savings to cover a longer term redundancy. I've been made redundant once and got another job straight away, in addition to a payout from my company which would have covered a few months out of work. I'm better off saving the £40 per month.

To me, critical illness is a kind of 'bonus' payout in the event of a nastier illness such as cancer or a heart attack, which is likely to stop you working for at least the short term. Remember that you also have to live for a few weeks after diagnosis to claim. If you die before then, there is no payout, so it's not a replacement for life cover. My partner became ill recently, and we would have been able to claim, but as we don't have critical illness cover, there is no payout. In light of this, I have decided to take out critical illnes for myself.

When you do decide to take out cover, make sure you do some research to get the best value cover you can, as they vary.

dunstonh

and can be difficult/impossible to claim if you have pre-existing conditions.

Although it is underwritten at point of sale so any pre-existing conditions would be known about. So, there shouldnt be any issue there.

PHI is probably the most important policy. Its superior to MPPI in almost all fronts yet it is the least talked about.

dimbo61

hi hugbubble,
go for level term life assurance(cavendish online ) HAVE BEEN RECOMMENDED
BY MSE.
check what life cover you may have with your employer !
think of the future have you got kids ( plan on having kids )
get enough cover as its cheaper when your younger .
does your employer pay you sick pay for 6/12 months and therefore you can defer any pay out for that time and this makes the premiums cheaper .
Shop round on this website to get the best deal GOOD LUCK

Hugbubble

Thanks for all the replies and helpful advice.

May be I should have set the scene more-

- Partner and I (same employer) get 6 months full pay and a further 6 months half pay in the event of absence through sickness
- our occupational pension scheme pays lump sum of 3x salary at time of death in event of death in service (we are going to get decreasing life cover to supplement this though)
- children definitely not going to happen
- also, I realised today through looking at our pension scheme website, that we would also get a lump sum in the event of total or partial incapacity to work in the event of sickness/ disability (although not sure how much this is)
**if anyone has a better knowledge of how the Universities superannuation scheme (USS) works in this respect- would be appreciated**

We both have permanent jobs and unlikely to have any benefit from redundancy cover.

HelpWhereIcan

Hugbubble wrote: »

Am posting here as the Insurance board doesn't seem to get much traffic- apologies if in the wrong.

Currently purchasing property. As naive FTB, would welcome advice/ opinion. Obviously planning on getting life insurance/ assurance but our mortgage broker (who also does insurance) is suggesting we get decreasing term critical illness cover too to cover the mortgage. I am dubious as to its worth (especially as it is expensive).

I'd welcome peoples thoughts.

Do not confuse critical illness with mortgage payment protection/PPI which has a horrendous record of not paying out.

I would say it but....

I was also told (cannot find a reference for the statistic at the mo through) that a person under the age of 35 is 3 times more likely to suffer a 'critical illness' before the age of 65 than they are to die.

Some other stats to consider

One in three people will suffer from cancer at some point in their lives, with a third of those succumbing to the disease before the age of 65*.

*Source - Cancer Research UK 12/01/2005

According to Macmillan Cancer Support, research shows one in seventeen people lose their home after being diagnosed with cancer and one in six have
difficulties in keeping up with their mortgage or rental payments.

http://www.macmillan.org.uk/Get_Involved/Campaigns/Better_Deal/Latest_news.aspx

This is not to try and scare you into taking the cover out (I really could not care less what you do). I just think that it is a type of cover that should not be dismissed out of hand and deserves a full exploration.

If the cost is too much, ensure that your adviser is independent for insurances. Cost is not everything and a decent adviser will help you get a policy that offers a good combination of cost, cover and claims experience.

By claims experience I mean that the company will have decent track record of paying out claims in good time and not have any onerous exclusions.

Providing they are independent, you should express your concerns about the cover to your adviser. They will be able to explain what is covered and what is not, look at the market etc etc

I think the 'test' that I would apply is the fact that vast majority of IFAs, brokers etc will say that they have Critical Illness and PHI (a form of income protection) and very few will say they have payment protection in place (except for maybe redundancy).

I believe strongly in Critical Illness Cover.Set up correctly for the right reasons it can offer invaluable cover when you need it most. e.g the 27 year old fireman whose mortgage was paid off when he was diagnosed with Lukemia (sp) by the Critical Illness plan I set up. He was able to make his own choices about treatment and returning to work in whatever role (even though the fire service paid him for the whole 18 months he was off).

I would suspect the fact that you may have some confusion over he different types and exactly what critical illness offers may mean that you have come across someone trying to sell you a policy rather than help you address the types of protection plans that suit you best.

Make your own decision, but if you do dismiss it, dismiss it only having looked into it properly and knowing exactly what you would have been covered for and what you would not have.

If cost is the over-riding factor use Cavendish etc, but also see if you or your adviser can set up a policy that provides you with some of the cover you need at a cost you can afford.

HelpWhereIcan

Hugbubble wrote: »

Thanks for all the replies and helpful advice.

May be I should have set the scene more-

- Partner and I (same employer) get 6 months full pay and a further 6 months half pay in the event of absence through sickness

Very good - no need for 'standard' Payment Protection plans though you may want to look at PHI to cover the period after that 12 months.

Hugbubble wrote: »

- our occupational pension scheme pays lump sum of 3x salary at time of death in event of death in service (we are going to get decreasing life cover to supplement this though)

Providing this is enough to cover your mortgage and other debts you are unlikely to need any more unless you want it.

Hugbubble wrote: »

- children definitely not going to happen

The main reason why you may not need life cover over and above your debts - just make sure you think about taking into account 'final expenses' such as funeral and probate costs etc.

Hugbubble wrote: »

- also, I realised today through looking at our pension scheme website, that we would also get a lump sum in the event of total or partial incapacity to work in the event of sickness/ disability (although not sure how much this is)

Remember that Critical Illness covers a lot more than disability and that you do not need to be classed as unable to work to claim. Other conditions covered include Heart Attack, Stroke, Cancer, Major Organ Transplant etc etc - make sure you look to see what would be covered before making your decision.

Hugbubble wrote: »

We both have permanent jobs and unlikely to have any benefit from redundancy cover.

:j Just remember that Critical illness cover is nothing to do with redundancy or inability to work.

homer_j_3

My view is that Death In Service and to a point, Employers Sick Pay is useless if you end up leaving that job.

I have lost complete faith in the term permanent job these days also.

That said, HWIC and Dunston have given you plenty of good information. The best thing to do is, work out how much you can afford or want to spend and then get a professional to prioritise your protection needs for you.

Going direct maybe slightly cheaper but if you get it wrong, that cost saving goes right out of the window.

snarffie

dunstonh wrote: »

Although it is underwritten at point of sale so any pre-existing conditions would be known about. So, there shouldnt be any issue there.

PHI is probably the most important policy. Its superior to MPPI in almost all fronts yet it is the least talked about.

What about pre-existing conditions with regards to parents/grandparents? What about personal pre-existing conditions that you have missed (old problems, that are important from a medical point, but appear to be unimportant to me). These things are only researched by insurance companies after the fact, when it's too late.

How can I check everything/everyone? Do you have any advice? Can I just send my entire medical record to the insurer and have them sort it out?

This is a serious question which worries me a bit.

Hugbubble

snarffie wrote: »

What about pre-existing conditions with regards to parents/grandparents? What about personal pre-existing conditions that you have missed (old problems, that are important from a medical point, but appear to be unimportant to me). These things are only researched by insurance companies after the fact, when it's too late.

How can I check everything/everyone? Do you have any advice? Can I just send my entire medical record to the insurer and have them sort it out?

This is a serious question which worries me a bit.

Seconded. Neither my partner nor I have any existing medical conditions but my partners mum died in her early 40s from cancer- will this affect a) the premium and b) whether a payout would be forthcoming?