Do you have life insurance, critical illness cover or income
Discussion
The only experience I,ve had with these policies is through a colleague and its not a good experience.We both work for a large FTSE100 company.The only difference is I,m a direct employee and he,s a contractor.As he knew that if he was to have an illness he would be in the s
t financially he paid large amounts of money per month for insurance just in case.Well he has been ill for 8mths and unable to work because of it.His first port of call was to the insurance company to be told no problem just send us the doctors report and we,ll sort it.So went to see this chap this week as I have done periodically.He is at his wits end at the moment because he has,nt received a penny at all.He phones them every other day to be told various stories of we are waiting for this letter we are waiting for that letter its under review etc etc.He is at the brink of defaulting on his mortgage all his savings gone and still no sign of payment.I,ve never seen this mountain of a man so upset and close to tears.If I ever seen the insurance rep again I,ll probably kill him.His words not mine.
t financially he paid large amounts of money per month for insurance just in case.Well he has been ill for 8mths and unable to work because of it.His first port of call was to the insurance company to be told no problem just send us the doctors report and we,ll sort it.So went to see this chap this week as I have done periodically.He is at his wits end at the moment because he has,nt received a penny at all.He phones them every other day to be told various stories of we are waiting for this letter we are waiting for that letter its under review etc etc.He is at the brink of defaulting on his mortgage all his savings gone and still no sign of payment.I,ve never seen this mountain of a man so upset and close to tears.If I ever seen the insurance rep again I,ll probably kill him.His words not mine.But there would be an income tax liability if you intended to benefit from your own trust and the transfer and gift would still count as part of your estate if it is passed 'with reservation of benefit'. A settlor interested trust that can handle retained benefits from a settlor/beneficiary who might/might not survive 30 days with no prejudice as to the tax effectiveness of the trust..? Overtones of a PI derived trust maybe.
Ginge R said:
Ghamer,
What is the problem? Is the company claiming the condition isn't covered or is there a deferred period which means nothing can be paid until that period is up? The longer the deferred period, the lower the insurance premiums.
Sorry pal have no clue of the ins and outs.I do know its a high street name and he is being passed from pillar to post.I dare say they,ll pay up in the end but by then he and his family maybe homeless.What is the problem? Is the company claiming the condition isn't covered or is there a deferred period which means nothing can be paid until that period is up? The longer the deferred period, the lower the insurance premiums.
ghamer said:
Ginge R said:
Ghamer,
What is the problem? Is the company claiming the condition isn't covered or is there a deferred period which means nothing can be paid until that period is up? The longer the deferred period, the lower the insurance premiums.
Sorry pal have no clue of the ins and outs.I do know its a high street name and he is being passed from pillar to post.I dare say they,ll pay up in the end but by then he and his family maybe homeless.What is the problem? Is the company claiming the condition isn't covered or is there a deferred period which means nothing can be paid until that period is up? The longer the deferred period, the lower the insurance premiums.
Which high street firm? I don't think that would be classed as naming and shaming, since there's nothing to shame.
I would say that you should probably get all of the facts before jumping to conclusion of the problem with the insurer/agent though.
He may have chosen a longer deferred period as mentioned above. It may be a 'high street' company with a crap product that a financial advisor with any knowledge wouldn't have sold.
The number of complaints people make about things sold to them by their banks, then tar us with the same brush is huge - it's not our fault when people chose to take products without the correct advice.
There may be a dispute about the illness in question - had he a past history of said condition or a related condition? Had he failed to disclose something about his medical history that the insurer have discovered after writing for his medical records?
People often 'forget' to tell insurers about things in their past without realising the implications of it - I personally had to shout at a family member who had lied to their insurer about smoking and made them inform the company.
People are always keen to complain about advisors/solicitors/doctors/accountants or large financial organisations but often aren't so keen to tell you why they had the problems.
If you find the info and post back here, the advisors watching this thread may be able to offer some advice to help.
Ginge R said:
But there would be an income tax liability if you intended to benefit from your own trust and the transfer and gift would still count as part of your estate if it is passed 'with reservation of benefit'. A settlor interested trust that can handle retained benefits from a settlor/beneficiary who might/might not survive 30 days with no prejudice as to the tax effectiveness of the trust..? Overtones of a PI derived trust maybe.
Sorry I should have clarified. Assuming the settlor doesn't require the money - for example their concern is purely that of wishing to leave as much as possible to their family.My understanding is that in this scenario, the monies can simply be placed into trust with whomever the settlor wishes to inherit being the beneficiaries. Therefore there's no reservation of benefit, and no IHT liability.
Will try and get more info don't want to be too nosey though.Its not a undisclosed medical thing though its a ruptured shoulder and an hernia problem for which he,s due surgery and physio.Also its not a deferred payment scheme either as he was expecting money from day one or month one anyway.Not trying to say all insurance is pants but its clearly not quite the peace of mind its made out to be.His company are a price of work that's for sure.
ghamer said:
Will try and get more info don't want to be too nosey though.Its not a undisclosed medical thing though its a ruptured shoulder and an hernia problem for which he,s due surgery and physio.Also its not a deferred payment scheme either as he was expecting money from day one or month one anyway.Not trying to say all insurance is pants but its clearly not quite the peace of mind its made out to be.His company are a price of work that's for sure.
Sounds more like an ASU / MPPI policy to me, which is very different and very inferior to Income Protection.The reason I wanted to know the insurer is that you mentioned high street company - no real high street companies offer income protection. Well none I would consider high street - Liverpool Victoria, PruProtect, Bright Grey, Scottish Provident, Ageas, etc.
If it's with the likes of Halifax, Barclays etc, it's not Income Protection, and it doesn't surprise me that he is having trouble claiming.
8Ace said:
Looking to get some of this. What level of cover is recommended? Realise this depends on individual circumstances but is there a sensible benchmark in terms of (outstanding mortgage) + (£k p.a. x (18-age of youngest child)?
There isn't a set recommended amount or formula to use as such, it will come down to your specific requirements and the potential impact an event could have on you and your dependants.We supply lots of these sorts of policy for our clients, feel free to drop me a mail or a PM if you need some help
8Ace,
Insurance should only be written if there is an exposure to a financial need being replaced. Examples of this may be, as you say, looking after a surviving partner, having dependent children or a mortgage. Once that commitment is removed, IN PRINCIPLE, there is no need to have such an obligation. It can also hedge against Inheritance Tax, etc.
If you assume that it costs about £150k to raise a child to the age of 18 (not double that for two) then multiply the years to go, by the number of kids. If you want to add Tertiary education then include that. Sorry for the Mail link..
http://www.dailymail.co.uk/news/article-2396843/Th...
Invested is ‘safer’ funds due to the gravity of the demands placed on it (only being required to earn a leisurely 3% or so after costs) and for 20 years, and used to replace lost main breadwinner’s lost income, a smaller amount (linked to inflation) can be used to generate income by taking the growth and by slowly bleeding off the capital. In an ideal world, you should have nothing left when the need has gone (look on it as walking out of the door backwards).
Once you’re dead, for you the war is over. But there is still Council Tax to pay and you still need feeding if you have a serious injury or illness. Critical Illness Cover pays out a tax free lump sum that pays out in the event that you suffer a serious illness or injury. It is paid out regardless of whether you have to stop work or not. The aim of it is not to provide a financial windfall for the individual or any dependants but to ensure that any lifestyle change that is needed becomes affordable.
It is my personal view that (**in an ideal world**) the amount of critical illness cover that should be held by the client should be an amount equal to five times the net annual salary/income of the individual. Sometimes, more often than not, that has to give a little due to the nature of the real world and other demands.
If the client is a (non-earning) financial dependent, the level of cover to be recommended, should be equal to three times the income of the individual who is the earner; this is intended to replace any lost income of you, if you’re the main earner, resulting from any change in your employment resulting from reduced hours worked in order to care for, for instance, your partner who may not be a tax payer but who may look after the family home.
Life cover may be bought on price (by default, get it written into a trust) but Critical Illness is driven by features which may only be separated by pennies each month or a few quid. The goal posts are always moving - it's a consumer driven market and sales pressures apply - if you had a CIC policy a few years ago, it might be worth rebroking – costs are competitive (which might outweigh your circumstances) and features have really improved.
I had a sales e-mail the other day, which I reproduce below NOT as an inducement but to give you an idea about what you may want to look for when working out a suitable CIC and/or insurance provider:
<Aviva have removed the severity requirement for Heart Attack and will now pay out for any clinically diagnosed Heart Attack, this move has also been made by Ageas, Friends Life, LV and Scot Prov. The others haven’t categorically said they will pay out on all clinically diagnosed Heart Attacks but their definitions are near on identical to ours and I believe they will pay out. Aegon, Bright Grey, L&G, Skandia and Zurich still have a minimum Troponin level on their definition so leaves a question mark over payment for more minor heart attacks.
Aviva will pay out for a Stroke as long as there is definite diagnosis of a stroke with new neurological symptoms which remain present for at least 24 hours, we have taken away the need for Permanent Neurological Deficit. Ageas, Friends Life and LV also have the same definition. Aegon, Bright Grey, L&G, Scot Prov, Skandia and Zurich have all gone beyond the ABI standard definition however still require permanent neurological deficit.
Aviva pay out on diagnosis of MS, L&G also pay out on diagnosis. LV and Friends Life will pay out after 3 months of continual symptoms, they will pay out earlier if there are two attacks within the 3 month period. Aegon, Ageas, Bright Grey, Scot Prov and Skandia all require 3 months continual symptoms for pay out (this is ahead of the ABI standard definition) Zurich require 6 months continual symptoms, this is the ABI standard definition.>
Sorry for the wrist slashing response. Good luck and always take regulated advice that suits your specific needs and that you trust.
Insurance should only be written if there is an exposure to a financial need being replaced. Examples of this may be, as you say, looking after a surviving partner, having dependent children or a mortgage. Once that commitment is removed, IN PRINCIPLE, there is no need to have such an obligation. It can also hedge against Inheritance Tax, etc.
If you assume that it costs about £150k to raise a child to the age of 18 (not double that for two) then multiply the years to go, by the number of kids. If you want to add Tertiary education then include that. Sorry for the Mail link..
http://www.dailymail.co.uk/news/article-2396843/Th...
Invested is ‘safer’ funds due to the gravity of the demands placed on it (only being required to earn a leisurely 3% or so after costs) and for 20 years, and used to replace lost main breadwinner’s lost income, a smaller amount (linked to inflation) can be used to generate income by taking the growth and by slowly bleeding off the capital. In an ideal world, you should have nothing left when the need has gone (look on it as walking out of the door backwards).
Once you’re dead, for you the war is over. But there is still Council Tax to pay and you still need feeding if you have a serious injury or illness. Critical Illness Cover pays out a tax free lump sum that pays out in the event that you suffer a serious illness or injury. It is paid out regardless of whether you have to stop work or not. The aim of it is not to provide a financial windfall for the individual or any dependants but to ensure that any lifestyle change that is needed becomes affordable.
It is my personal view that (**in an ideal world**) the amount of critical illness cover that should be held by the client should be an amount equal to five times the net annual salary/income of the individual. Sometimes, more often than not, that has to give a little due to the nature of the real world and other demands.
If the client is a (non-earning) financial dependent, the level of cover to be recommended, should be equal to three times the income of the individual who is the earner; this is intended to replace any lost income of you, if you’re the main earner, resulting from any change in your employment resulting from reduced hours worked in order to care for, for instance, your partner who may not be a tax payer but who may look after the family home.
Life cover may be bought on price (by default, get it written into a trust) but Critical Illness is driven by features which may only be separated by pennies each month or a few quid. The goal posts are always moving - it's a consumer driven market and sales pressures apply - if you had a CIC policy a few years ago, it might be worth rebroking – costs are competitive (which might outweigh your circumstances) and features have really improved.
I had a sales e-mail the other day, which I reproduce below NOT as an inducement but to give you an idea about what you may want to look for when working out a suitable CIC and/or insurance provider:
<Aviva have removed the severity requirement for Heart Attack and will now pay out for any clinically diagnosed Heart Attack, this move has also been made by Ageas, Friends Life, LV and Scot Prov. The others haven’t categorically said they will pay out on all clinically diagnosed Heart Attacks but their definitions are near on identical to ours and I believe they will pay out. Aegon, Bright Grey, L&G, Skandia and Zurich still have a minimum Troponin level on their definition so leaves a question mark over payment for more minor heart attacks.
Aviva will pay out for a Stroke as long as there is definite diagnosis of a stroke with new neurological symptoms which remain present for at least 24 hours, we have taken away the need for Permanent Neurological Deficit. Ageas, Friends Life and LV also have the same definition. Aegon, Bright Grey, L&G, Scot Prov, Skandia and Zurich have all gone beyond the ABI standard definition however still require permanent neurological deficit.
Aviva pay out on diagnosis of MS, L&G also pay out on diagnosis. LV and Friends Life will pay out after 3 months of continual symptoms, they will pay out earlier if there are two attacks within the 3 month period. Aegon, Ageas, Bright Grey, Scot Prov and Skandia all require 3 months continual symptoms for pay out (this is ahead of the ABI standard definition) Zurich require 6 months continual symptoms, this is the ABI standard definition.>
Sorry for the wrist slashing response. Good luck and always take regulated advice that suits your specific needs and that you trust.
8Ace said:
Looking to get some of this. What level of cover is recommended? Realise this depends on individual circumstances but is there a sensible benchmark in terms of (outstanding mortgage) + (£k p.a. x (18-age of youngest child)?
Covering the mortgage is always the first priority for most, especially if it's deemed that the remaining person wouldn't be able to afford to pay the mortgage and keep the home.In addition to that, if said remaining spouse wouldn't be able to run the home mortgage free (council tax, home insurance, utilities, food, clothing etc) then an income can be provided until a set end date (until a child reaches a certain age or the living spouse reaches a certain age).
In my opinion though, the most important thing is protecting your income. It's all very well to cover someone if you die early, and there is a risk of this happening and causing tragedy.
BUT... what if you cannot continue working? The spouse may need to care for you and leave their job, leaving the household possibly with no income whatsoever.
People often overlook this. Dying early is usually covered. Suffering a critical illness (cancer, heart attack, stroke etc) is often covered. Covering an income in the event of being injured or ill and unable to continue working is very often overlooked.
In that scenario, you're still alive... you're still a burden - you need feeding, clothing, possibly even caring for... I never understand why people do not choose to protect this!
Feel free to PM me if you want some advice - I specialise in protecting the likes of doctors, dentists and other professionals so have a lot of experience on tailored protection advice.
Sorry for the long response!
DAmiJO said:
Any body point me in the direction of some decent cover? Got our first child on route /mortgage etc.....
It's a very individual thing... the set up has to be tailored to your situation. Feel free to PM me and I can get the info required and give you a proper recommendation DAmiJO said:
Any body point me in the direction of some decent cover? Got our first child on route /mortgage etc.....
I'm at the other end of the spectrum. Mortgage paid, kids all left home but wondering how my wife would pay the utilities on the house should the worst happen. Until recently I've always had 4 x salary from my employer but changes mean I've no longer got that. I guess I need some quotes 
Rich,
You mention 4 times death in service benefits; how much (I don't expect an answer!) do you have saved up which might pass to you wife? If you simply want that to be supplemented by a cheap plan, would your wife prefer regular income or a lump sum (which might cause more problems?).
You mention 4 times death in service benefits; how much (I don't expect an answer!) do you have saved up which might pass to you wife? If you simply want that to be supplemented by a cheap plan, would your wife prefer regular income or a lump sum (which might cause more problems?).
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