Life insurance products - income protection, critical illness, death benefits, etc.

[Participant]

Hi

With a large mortgage and plenty of responsibilities, as well as the fact that I'm not getting any younger, I've come to realise that my family and I are not adequately protected if the event of our untimely demise / poor health.

I'm interested in people's opinions please on life products like the above. I've spoken with advisers (nothing fancy) and have been quoted £200 per month for death benefit (reducing in line with mortgage liability) and income protection for me and my wife until we retire.

Do lots of people have this kind of product? Or do you self insure / hope that it won't happen to you?

Interested to hear people's thoughts on if this is all just a massive con / gravy train and they'll always find a reason not to pay, or if it's essential for a middle-aged family man mortgaged to the balls, or something in between.

 

[Participant]

Do you get any benefits through work?

We have death in service benefits through work plus critical illness cover but then also have separate life insurance individually that will more than clear mortgage. Idea being that in the event of a death, the mortgage is cleared and then a considerable lump sum to help with ongoing costs etc.

We pay about £60 per month for the 2 life insurance policies. These are also rising policies so rise with inflation and are lump sum for more than mortgage balance. The expensive part of insurance when we looked was private critical illness or unemployment (income) protection policies.

You need to balance what is affordable and what you need. We had some silly quotes to add loads of extras on but decided the work benefits plus life insurance was enough.

Through work I get twice my annual salary on death, which would be about 1/3rd of my total mortgage liability.

£200 seems a lot, we have a decreasing benefit mortgage protection policy that pays out in the event of death (for either me or the mrs) at around £22/month and I have an income protection policy that pays out in the event of critical illness (deferred for 3 months), which costs £41/month. Need to look at getting the mrs one again as she's working now.

Our mortgage balance is currently ~£500k. Not sure what yours is but that might explain the difference in premium.

Critical illness and income protection are different, critical illness being cheaper but less comprehensive. Is the £41 critical illness or income protection?

 

[Participant]

I suspect it's the income protection until retirement that has jacked up the OPs price.

Correct, income protection makes up £140 of the £200.

 

[Participant]

I've been thinking about some sort of income protection or similar too - something that pays out if for whatever reason I can no longer do my job for non critical Ill health/mental breakdown etc, but not sure that exists/is cost effective.

It definitely exists because that's the definition of income protection products. You have to be signed off by a doctor and can't work (with varying definitions of that) whilst receiving the payments.

As for cost effective, it seems really expensive but then if something happened to me that meant I couldn't do an 'office' job, I couldn't self insure because if I could, I'd retire right now!

As for brokers' self interests, I'm not sure how you manage this as you seem to have to go through a broker to buy the product.

 

[Participant]

If you saved 200 quid a month and invested (not all in crypto ) you would be better off and you can see the money- the insurance providers aren't charities and they are "winning" overall.

I do save / invest too, but it wouldn't pay for my mortgage for very long if I couldn't work; I'm the main earner.

Not really, unless he is the only breadwinner, as they can simply downgrade their home to live within their means.

That's what I'd be paying to avoid.

 

[Participant]

I pay about £75 a month for life cover £200,000 for mortage, cirtical illness and income protection.

Income protection for how many years and - if I may ask - how much would it pay per month? Not trying to challenge just checking I'm not being ripped off.

The £200 I mentioned above includes £4k per month net until I'm 70.