Critical illness *and* income protection cover?

JayZed

Is it worth having both income protection cover and critical illness cover? If I were to have, for example, IPI covering 60% of my salary and also took out critical illness cover, would both policies pay out if I were to get a covered illness that prevented me from working?

Context: I'm 35, married, one child, and I am the main income-earner in the family. I'm thinking about getting CI cover for all three of us and income protection just for me. Would welcome any comments or advice.

Would also appreciate any comments about personal accident insurance, which I'm not planning to take out unless someone can give me a good reason why I should.

dunstonh

Is it worth having both income protection cover and critical illness cover?

That is a bit like asking whether its worth having buildings insurance and contents insurance of just one of them.

There are no areas of overlap on a CI policy to a PHI policy. One pays an income on sickness and the other pays a lump sum on diagnosis of specified critical illnesses. They complement each other but do not take away from each other.

Would also appreciate any comments about personal accident insurance, which I'm not planning to take out unless someone can give me a good reason why I should.

Absolute rubbish. Cash cows to the providers.

You are much better off statistically getting a decent PHI policy (and not a budget income protection plan) and a CI policy for say the mortgage amount.

You cannot insure every event. To do so would leave you with no money to live on. So you have to play the stats game and decide what does and does not get covered. You should also include retirement provision in there as well as statisically 4 out of 5 men will make retirement. So, why waste £10-15 on a cash cow like personal accident protection (PAP) when your chances of successful claim are limited when it can go to much better use on a decent PHI policy or to your retirement provision.

JayZed

Thanks dunstonh, useful advice as ever from you. I'd like to ask one further question if I may. I'm the main income earner in our household, and am likely to remain so for the foreseeable future. We could get by without my wife's (part-time self-employed) income, but definitely not without mine.

Under a scheme provided by my employer, I can get (relatively) cheap CI cover for me, though not for my wife. Even so there's no way I can afford to cover our mortgage.

My plan is to get CI cover for me that would cover about half our outstanding mortgage, and half of this amount (1/4 of our mortgage) for my wife. This is the max I can afford at the moment. I'm also planning, at this stage at least, to take out PHI for me (covering about 60% of my gross income) but probably not for my wife.

Does this sound like a reasonable course of action?

dunstonh

Seems reasonable based on the budget issues you mention. You are focusing on the greatest potential loss.