Do I need life insurance?

Minstadave said:
The guy was well recommended but just wanted to heap insurance on us.

Life/critical illness/income protection were all pushed hard. There was cash back with one of policies which he took a chunk of too before passing the rest on to us.

This was a few years ago but just felt the chap didn't really do anything we couldn't have done and wasn't convinced it was value for money.
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anyone in financial services offering cashback - stay well clear of them.
 
DannyW said:
I remortgaged my house earlier this year and got £1000 cash back, to this day I've not seen a better deal (monthly cost for 2 years)
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Sounds like cashback from the mortgage lender as part of the mortgage deal rather than the broker offering cash back to me, which is not what booyaka was talking about. There is simply no way any broker would give you £1000 back from the commission of the mortgage and/or protection products (and in a lot of cases wouldn't even earn anywhere near that amount to even be able to).

And I agree - Any decent broker will sacrifice commission for a lower insurance premium to the client rather than offer cash back.
 
Permanent Health Insurance.

I advise but mostly estate planning and investment management so don't know the life market "that" well.

I've always felt PHI can be not all its cracked up to be. You need to be absolutely sure of the terms. You don't want 6 months deferred if you'll be broke within 2 without income.

I would suggest going to an adviser. The online offerings still pay commission. Least with an adviser you get advice. Although I would try and find a good indie rather than pure life sellers as they'll tend to add as much as possible for the commission.

The commission is typically the up front first 4 years worth of premiums. For instance, if you stayed with the same car insurer, your broker, if you used one, could ask for an up front payment. If you stop paying, some of the commission goes back.

It's worth looking into, even if you're not married and no kids. My partner developed terminal cancer and the life assurance paid out and help immensely.
 
From my understanding/memory:

Life insurance: Covers the mortgage if you die.
Critical illness: Covers the mortgage if you are terminally ill
Income protection: Pays you monthly if you are ill enough not to be at work for long periods of time.
Family income benefit: Pays monthly amount (ie wage) if you die, for the duration of the term of the cover.

I have:
Life insurance for mortgage (£10 a month)
Income protection from work in the form of:
- 3/4x salary paid if I die.
- 2/3 salary if I'm ill from work until I return.
Family income benefit of £3000 a month for 20 years should I die (£20 a month).

I'm pretty much better off dead. Heh.
 
I am in a similar position to you bloodiedathame, I have life cover to cover the properties, but as they were not decreasing policies, they would now give a lump as well. I have a policy which pays out monthly amount in case of my death, I have a policy which gives critical illness protection, again one for a lump to cover mortgages and another for monthly. My wife has a similar payout policy in event of her death but nothing else.

I figure given the amount I pay in professional fees, mortgage and taxes that the family would be slightly better off with me dead. Certainly much better off if I got critically ill, then died a different way after a period of time.
 
I was paying critical illness for two years at nearly £40 a month not realising my work offered the same benefits.

I should add that I'm married with two kids and my wife only works part time, hence insured every way possible so they can continue to live without financial issues if I die.

In ops case with no dependants most of it is irrelevant but check that the outstanding mortgage dept isn't transferred to family (I highly doubt it). Maybe look at some sort of critical illness cover.

Also worth checking that life insurance isn't a requirement of the mortgage!
 
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Work benefits should be seen as a bonus rather than covering the need.

You never know when you might decide to move on to a new employer, your employer removes the benefits, you you get made redundant. Any of these means instant removal of the benefit and you may not be in the position to re-cover yourself on the open market if things have changed with your health (and at the very least it will be more expensive). Always best to have a proper policy.
 
BDEE said:
Work benefits should be seen as a bonus rather than covering the need.

You never know when you might decide to move on to a new employer, your employer removes the benefits, you you get made redundant. Any of these means instant removal of the benefit and you may not be in the position to re-cover yourself on the open market if things have changed with your health (and at the very least it will be more expensive). Always best to have a proper policy.
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Spoken like a true salesman. :)

Whilst you're right, that's a chance I'll take, as it would double my monthly cost.
 
Minstadave said:
Sounds like you need income protection insurance more than life insurance.
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This.

I have both life insurance and income protection insurance but both are for different reasons. The life insurance is there purely to pay off the mortgage (and some left over) so that if I did my Wife doesn't have to worry about paying the mortgage or really worry about money again. It gives me absolutely no benefit and if I had no wife / family I wouldn't bother and the bank could just take the house back to pay off the debt.

Income protection on the other hand is awesome, you need to design it to match your sick pay from work (which could be difficult in your circumstances). Essentially work out how long you could afford to support yourself without pay and that's the deferral period before income protection would kick in. The longer you can set this the cheaper your policies will be, significantly so in some cases. For example I get 6 months full sick pay and 6 months half so I actually have two policies that stack together. One of them kicks in after 6 months but only pays a small amount, the other one kicks in after 12 months and pays significantly more. When the two stack it covers about 70% of my normal salary and is a guaranteed index linked payment that runs all the way up until I hit 60, or can return to work.

There are a few "must haves" you need to look for with Income protection. It needs to be index linked or in 30 years your payments could be worth a fraction of what they are now, you also want it to have an "own occupation" clause. They normally come in three kinds, any occupation, similar occupation, or own occupation. Essentially it boils down to what work you could do. If you were a 6 figure earning business CEO with a "any occupation" clause and something stopped you running your business for health reasons but you could stack shelves in the supermarket you would loose your insurance if you didn't take that job. If you have the own occupation clause you don't have to go back to work until you can go back to a job of the same caliber as your own. You also want it to be a guaranteed policy. This means that other than inflation your payments never go up. This is particularly excellent if you start it when you are young.

Although most people cover this with "critical illness" tagged on to the life insurance if you actually read the details on this some of them are incredibly specific on what circumstances have to occur for you to get your payouts. Income protection is much simpler in that if you are too sick to do your job, you get the payment.

The only bit I wouldn't have is the unemployment cover (They normally come as Accident / Sickness, or Accident / Sickness / Unemployment). My reasoning for this is that this is really there to protect against very long term sickness / health issues and not a short redundancy. When I did quotes for my circumstances covering unemployment the quotes were well over double.

In short, income protection is awesome and everyone should have it!
 
Personally I don't bother but that is more because I think my estate (including payout from employer) will be sufficient to support my family in the short-medium term.
 
bloodiedathame said:
Out of interest, what products do you pay for (e.g. Life insurance, critical illness)? And how much if you don't mind?
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Price is irrelevant as it is all priced down to age / term of cover / type of cover / amount of cover etc, so comparing premiums is like comparing apples with pears.

That said I pay for:

PHI £26pm for £1800 income deferred for 6 months payable to age 67 with indexation.
Life & CI Term Assurance £58.50pm for £125k 37 Year policy when started.
Whole of Life Assurance £195k - Currently £48pm with indexation.

I also pay £3 a month for an additional £150k life assurance (work benefit) and £8 a month for £120k Critical illness cover (another work benefit) - These are simply too cheap not to have, but as I've said before I see them as a nice to have, as I could lose these (and have in the past when I was made redundant).

I also pay £10 ish for £100k life policy which I took out on my partner, and previously had CI cover for her too (no longer in place as it has been claimed on).
 
Hi All, sorrt to revive this thread but im looking for some help.

Ive just looked into what im paying and have been for 5-6 years now...madness i should have been more on the ball and i will be from now on as i usually pride myself on being so.

Im paying £10.75 per month for Critical Illness cover for a cover of £22.5k
Im also paying £26.26 per month for a cover of 80k (This was originally half of my first mortagage when i bought a house with a friend).
I then added on the extra £22.5k when after me and my partner bought him out and moved on to our next property...this being half of the next properties value/remaining mortgage.

So £37 for a cover of just over £100k...ive not looked into this until today as we have a 10 week old and my partner has some life cover (£8 a month and depreciating), she cancelled it so we could align ours and the amounts....

Well ive just used a comparison website and filled in a dummy run...£150k cover i can get for £12 with L&G who im already with above...well through brokers (im starting to think im being ripped off here).
So my question is, apart from am i being ripped off...do you know any websites i can use to compare (or recommend) and do they tell you wants included in the cover also, like terminal illness, income protection etc etc?

Im also pating £27 a month with MMS Premium for income protection for £800 pm.
I found Payment Protection on the same comparison website for £20 and a 30 day period until claiming.

I think i need some advise here, could i not get all of this covered off in 1 policy and for a lot less than £64?

Bit mythed with it all
 
No in short.

There is a reason you can't buy things like PHI through aggregators (please also note there is a difference between true PHI which pays to retirement and income insurance which usually only pays a maximum of 2 years). Also a lot have started withdrawing from offering critical illness and going basic life cover only (which is what that £12 a month quote you have had will be). Advice is really required for these more complex products. I don't understand what you think you are being ripped off on, as you seem to be comparing apples with pears.

There are some good protection only brokers about as well as IFAs who will be more than happy to look at your current situation.
 
BDEE said:
No in short.

There is a reason you can't buy things like PHI through aggregators (please also note there is a difference between true PHI which pays to retirement and income insurance which usually only pays a maximum of 2 years). Also a lot have started withdrawing from offering critical illness and going basic life cover only (which is what that £12 a month quote you have had will be). Advice is really required for these more complex products. I don't understand what you think you are being ripped off on, as you seem to be comparing apples with pears.

There are some good protection only brokers about as well as IFAs who will be more than happy to look at your current situation.
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Thanks for the advice, i will seek a broker/IFA now. Once i see what the L&G actually covers.
Thanks
 
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