Income Protection insurance with separate life assurance or Critical insurance with l

lucas,ian

Hi all

I am in the middle of changing my current life assurance with built in critical insurance policy, and I have now been offered another option - Income protection insurance?

I was wondering if anybody had some helpful advice as to which is better?

Are there any other gains other than price?

Income project supposedly pays out a fixed amount every month for the life of the term, i.e. 25years if needed or for as long as you are off work, and they can start paying out from 3 to 4 weeks after being off work with a price of around £25, if you then add life insurance about £18, giving a total in the region of £43

Life assurance with critical insurance is around £65, with about 36 covers in the critical sectors, both policies are fixed and not variable.

If anybody as got any advice it would be greatly received.

webmasterpolo

If you want professional advice you should talk to an IFA.

But to give you a little more information:


IP= Income protection
CI=critial illness

IP is a different type of policy to life and CI. The terms of this policy can be very different depending on the company providing it. For example some policies will pay out the monthly amount as long as you cannot perform the duties of your own job. Others policies only pay out if you cannot perform ANY job, so the chances are much smaller they will have to pay anything.

To give yourself full protection in the event of any problems, you would need all 3 life, CI and IP.

Life = pays out on death
CI - pays out on diagnosis of a specified CI
IP = pays out if you are on the sick from work

IP is the usually the most expensive cover, because stats show you are much more likely to be off sick from work at some point than you are to either die or be diagnosed with a CI.

One thing you might like to also consider is opting for separate CI and Life policies, and if you currently have a joint policy with someone else, consider 4 singles instead. This way you can the option of 4 claims with 2 life and 2 CI rather than 1 with a joint life and CI policy. It may not seem like a big deal, but once a claim is made, these policies end, so they may leave the other person with no cover. If they are older and have a worse medical history at that point getting new cover will be expensive if not impossible.

Also compare policies that offer fixed prices for the life of the policy to ones that are reviewable every 5 years. If they are long term policies eg 25 years you might be better off choosing a fixed price for a little more now, than having 5 price increases over the term.

MSE has a good section here with links to online brokers who will offer a good comparison of cheap quotes for you. http://www.moneysavingexpert.com/insurance/level-term-insurance#cheapest

However I would recommend you contact an IFA and have a financial review so he can tell you exactly what type of policy with what terms and conditions and what level of cover you need. This will cost you more than buying from an online broker, but it will give you the professional advice that could be worth a lot more to you in the future if you need to claim.

Hope my ramblings help.

-Web

homer_j_3

I would be very cautious about giving up the existing CI policy as the definitions may be less specific which means that you have better cover than what is currently available.

What you have been told to do is the best advice anyone can give, go and see a mortgage protection specialist (broker) or an IFA for them to review the existing cover and suggest a suitable solution for you.

Income protection - is it Mortgage Payment Protection Insurance or Permanent Health Insurance. If its PHI then you need to look at your current employment benefits for sick pay so you can get the right deferment period. The longer this is, the cheaper the cost will be.

*MF*

Not only want to support the comments/advice from webmasterpolo, I want to congratulate him(?) on the quality of the post itself - and I hope lucas,ian - it has conveyed to you that CI and IP are two different types of cover, designed for different contingencies and that you cannot therefore compare one as better or worse than the other - they are apples and pears.

lucas,ian

Many thanks for all the advice given.

I have done exactly what Webmaster has said, I have seen an independent financial advisor who has given me some food for thought on my options.

The problem is you just never know what’s round the corner; you could end up paying for everything just to be on the safe side.

I do think I will be going with a new CI cover for now, a lot more expensive than my current policy, but I it’s the safer option.

Thanks again to all of those that replied.