family income protection benefit and income protection

hi123

hi
i am in process of arranging cover for myself and wife
problems i am facing are
family income benefit or life assurance which one to go for ,premium is about the same for a sum of 200k till we are 60
regarding income protection ,does it pay to shop around or are all ifa's will get the same premium for me
i have been offered friends provident's policy for same work for about 61£pm for me and 105£ pm for my wife
want to be sure of the best quotes considering i will be paying about 200£ pm for all protection
can the experts please help

dunstonh

family income benefit or life assurance which one to go for ,premium is about the same for a sum of 200k till we are 60

Family income benefit is life assurance.

egarding income protection ,does it pay to shop around or are all ifa's will get the same premium for me

Pricing on products does vary to some degree with financial products. It depends on how much time you want to waste going through the advice process with each one.

want to be sure of the best quotes considering i will be paying about 200£ pm for all protection

I suggest with a premium that size that you work to fee basis or customer agreed remuneration (agree a fee but use commission to meet the fee with any surplus being used to reduce the premiums).

hi123

thanks
i do realise that family income benefit is life assurance but a monthly sum rather than lumpsum,i am finding it difficult to decide on which one is better though
any specific pros and cons to help make the decision
regarding the time,does it have to be lot of advice and time ,how much would i expect to pay ifa ,does it have to be local and any recommendation with ifa's here at moneysaving,whom people have used to help for reasonable service and cost or are one of the online ones better ie cavendish etc

dunstonh

any specific pros and cons to help make the decision

FIB is the cheapest form of life cover. It is designed to pay an income rather than lump sum benefit but the beneficiary can elect to take the remaining benefit as a lump sum minus a penalty (typically means they get around 70%). Stats from long ago (I havent seen any recent ones) used to come out saying that over half the people claiming chose to take the benefits as a lump sum instead of income despite the loss.

If you did an FIB and level term assurance at the same premium and term then in the early years if you did the FIB would pay out the most. In the later years and in particular toward the end of the term the FIB would pay out less. If you died after 19 years into 20 year term then the beneficiary would only get one year of income but the level term would pay out the full amount. Typically, I would go level term (and have myself) as a preference. Its only when you are really budgeting for every penny or have an explicit income need that you would probably fall back to an FIB.

regarding the time,does it have to be lot of advice and time

The IFA can do a full analysis and tell you what you need or a shorter analysis which may not be as accurate but a ball park figure. The full analysis will take things like pensions and investments into account so information on those would be needed. A shorter analysis is often used where you choosing your policies based on the amount you want to pay. Especially if you know you cannot meet every need area. Either way, its quicker than a full review.

how much would i expect to pay ifa

A simple transaction could typically be around the £500-£750 mark (although some may price themselves higher as they arent interested. One near me has a £2500 flat charge which is very expensive for small cases but cheap for large ones which is their target market).

If you go fee basis then the products are arranged on nil commission terms and that can knock money off the premiums and you should be able to recover that over the term plus more to spare.

Another way to do it is not write a cheque for the fee but the IFA takes commission to equal the fee with any surplue being used to lower the premiums. This way the cost of advice is factored into the premiums but its cheaper than going normal commission. This is known as customer agreed remuneration and expect to see more of this from IFAs in the future as the FSA see this as a good option.

does it have to be local and any recommendation with ifa's here at moneysaving,whom people have used to help for reasonable service and cost or are one of the online ones better ie cavendish etc

Cavendish and the other online execution only IFAs will not give advice. They are order takers and that is why they do it cheap. Effectively they have a factory line of people dealing with the applications. The minute you want advice, the costs go up as you need a regulated and authorised individual and there is a liability to the company (i.e. you can complain to the FOS if advice is wrong but you cant if you go DIY). You often find the online companies advice channels are quite expensive. Locality isnt an issue as the whole process is based on documentation. Whether its filled in face to face, online, email or posted at the end of the day its still factual data.

So, you need to decide if you want advice or happy to go DIY.