Critical illness cover & Income protection with new mortgage

Chris344

Chris344

Chris344

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Bexleyheath, London.
I am interested to know if it's worth taking such policies out now I am heavily financially committed.

The critical illness policy that has been recommended to me by a financial advisor is a decreasing plan with decreases in value in line with my new mortgage which includes one off payments for things like kidney failure, loss of limbs, blindness etc without affecting the final payout if a critical illness should arrise.

Income protection will pay me 80% of my currently monthly income index linked for up to 5 years if I am unable to work due to health reasons.

Is it wise to take these types of polices out or are they not worth the paper they are printed on?

I 'heard' a friend of a friend received 70k for having pre-cancerous cells that have since been removed with no further treatment.
 
Do you have any dependants? The impact on them should be considered. As I'm single I took the view it wasn't worth it
 
It's just my partner and I who has already fought leukaemia at the age of 23 hence I'm now considering such policies
 
I dont know how I feel about this, I cancelled 300k worth of Critical illness cover a few months ago. My wife was diagnosed with breast cancer a few weeks ago. The 300k would have been nice but to be honest I don't think I would have felt good about the money.

However if you have a family and a mortgage could you survive without your income?
 
Dr House said:
I dont know how I feel about this, I cancelled 300k worth of Critical illness cover a few months ago. My wife was diagnosed with breast cancer a few weeks ago. The 300k would have been nice but to be honest I don't think I would have felt good about the money.

However if you have a family and a mortgage could you survive without your income?
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I am very sorry to here this, good luck with your wife's treatment. In situations like this the money doesn't mean a thing... It just helps. No you should not feel guilty if you had of received the payment.

I do not have dependants other than my partner who has an income.
 
Are you well? Have you always been?
If not you will find a policy littered with exclusions, and if you fail to declare something that is noted in your medical records then they shall not pay out.
If all is done correctly then the policy might be very worthwhile.
I have such policies.

Btw payout on income protection is tax free but they will not pay a level higher than your current income, see this as them wanting you to get better, or saving them money. The eighty percent figure you mentioned, is that eighty of your net, if so then thats about right for such a policy, it will not be eighty of your gross.

Critical illness is hot and miss, i have never ever geard of a payout for precancerous cells, usually in that case it would be a malignant melonoma, but if they get it before it spreads, them they domnot pay out. If it has spread they will payout, as you will have a zero percent chance of making it to two years.

Life cover is necessary, critical llness will remove financial burdens on property if you get ill, and income protection remove financial burdens on general living costs.

If both you have good full time jobs, and can afford one complete loss of income, then might be best to avoid the premiums of income protection, otherwise it is worth considering.

Also is it a peroccupation income protection? If you cant do your own job but could do something else, will they still pay out? Or will they expect you to start doing something else?
 
Hikari Kisugi said:
Are you well? Have you always been?
If not you will find a policy littered with exclusions, and if you fail to declare something that is noted in your medical records then they shall not pay out.
If all is done correctly then the policy might be very worthwhile.
I have such policies.

Btw payout on income protection is tax free but they will not pay a level higher than your current income, see this as them wanting you to get better, or saving them money. The eighty percent figure you mentioned, is that eighty of your net, if so then thats about right for such a policy, it will not be eighty of your gross.

Critical illness is hot and miss, i have never ever geard of a payout for precancerous cells, usually in that case it would be a malignant melonoma, but if they get it before it spreads, them they domnot pay out. If it has spread they will payout, as you will have a zero percent chance of making it to two years.

Life cover is necessary, critical llness will remove financial burdens on property if you get ill, and income protection remove financial burdens on general living costs.

If both you have good full time jobs, and can afford one complete loss of income, then might be best to avoid the premiums of income protection, otherwise it is worth considering.

Also is it a peroccupation income protection? If you cant do your own job but could do something else, will they still pay out? Or will they expect you to start doing something else?
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Hello Hikari

Yes I am well and have always been well. I have had my critical illness with life cover accepted after they viewed my medical report and is now live however I do have a 30 day cooling off option. It was accepted with no exclusions imposed.

I will double check the income per-occupation section, we do both have good full time jobs in decent fields.

I am debating if both policies will be beneficial for me but feel I may stick with the critical illness/life cover policy at least.
 
hibernian1875 said:
I've worked within several financial institutes and Income Protection is rarely worth it. The disputes over claims are enormous, although recently they have had to be a lot more clear in their T&Cs but still not usually worth it.

Critical illness cover is a different matter and often a good idea with regards to large financial commitments. Different institutes have their own lists for what they constitute as a Critical Illness and so this is something to keep an eye on when reading T&Cs.

Regarding some earlier comments, a critical illness means you've been diagnosed with less than 12 months to live so having things like cancer that may be curable means that it won't be paid out until the critical diagnosis.

Most IFA's work on commission and so will often recommend these extra products. It may be worth going down the route of a paid session (ie pay a lump sum for a couple of hours session for advice and them to look over your finances on a 0% commission basis) so that the advisor has no commission incentive to advise other unnecessary products. It mainly depends on your current financial situation, commitments and savings so we can only give a rough idea.

Please note this advice is not FSA regulated :p
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Thank you hibernian1875

This is my main concern will I be paying for a policy that turns out to be effectively worthless or very difficult to claim and difficult to continue claiming after a few months in to the claim etc.

If I lost my job, work in central London is not really a concern, health reasons would impact my ability to work depending on what the issue happened to be.

I may just sick with the critical Illness/life cover in this case to cover the mortgage + a few k in the event of the worst case happening.

The cover I have opted for pays out for critical illnesses such as blood cancers even if they are not terminal which seems good?

I am always weary of tele sale advisors working on commission recommending policies.
 
I was wrong about the 12 months critical illness bit, was thinking about life cover paying out when you get diagnosed with a terminal disease, i've amended as it's been a long weekend but go to someone like LifeSearch for a paid session with 0% commission and you should get straight advice.
 
Not a problem thank you for your input.

I may just leave the income protection cover and increase the amount covered in the critical illness/life cover.

I will look research Lifesearch :)
 
I wouldn't take up any policy offered by a financial advisor. They get kickbacks from the companies involved and usually they are not the cheapest either.

Life insurance cost me £80 a month, cancelled it looked on line and have one for around £20 a month for more money.
 
scorza said:
Do you have any dependants? The impact on them should be considered. As I'm single I took the view it wasn't worth it
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^this

If I had kids or a wife/partner either not in work or in low paid/part time work then I'd take out cover. As I've just got myself to look after at the moment then there isn't much point - if I ended up in some life changing accident that left me unable to work/look after myself then I'd be selling my flat anyway and moving to my parents so no need for mortgage protection.
 
Dr House said:
I dont know how I feel about this, I cancelled 300k worth of Critical illness cover a few months ago. My wife was diagnosed with breast cancer a few weeks ago. The 300k would have been nice but to be honest I don't think I would have felt good about the money.

However if you have a family and a mortgage could you survive without your income?
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Out of interest how much were you paying a month for your Critical Illness cover?

Good luck with your wifes treatment :)
 
j0s said:
Life insurance cost me £80 a month, cancelled it looked on line and have one for around £20 a month for more money.
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Life assurance is a different ball-game: it covers your dependents only if you die. The point of CI cover is that covers mortgage payments of you are alive, but too ill to work.


The main thing to consider, is how does this policy fit in around any work-supplied sick cover? If work gives you (say) six month's fully-paid sick leave, then a policy which pays out from day one is a waste of money - and much more expensive than one which doesn't start for six months. In general, the sooner they start, the higher the cost. Of course if you only have statutory cover, then factor that in. If you are self-employed then day one cover may be necessary.


M
 
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