Life Assurance, Mortgage Insurance and Critical Illness etc.

[blueST]

Can anyone point me towards a source of good information on the above.

Our mortgage advisor has suggested it is a good idea for our circumstances. He's provided a quote which seems expensive, but I've nothing to compare.

Also, I've had a lot of people tell me critical illness cover is a waste of time.

Any thoughts?

[Sarnie]

blueST said:

Can anyone point me towards a source of good information on the above.

Our mortgage advisor has suggested it is a good idea for our circumstances. He's provided a quote which seems expensive, but I've nothing to compare.

Also, I've had a lot of people tell me critical illness cover is a waste of time.

Any thoughts?

You have mail

People's opinions will vary vastly on this subject, guided mainly by their own circumstances. A young single person may not have much need for Life Insurance as who are they going to leave the property to? But, they will have needs such as to ensure that they can always pay the mortgage so Income Protection and/or Critical Illness Cover may be a consideraton etc. Conversely, a married man with three kids will want to ensure that if he kicks the bucket that his family will be financially secure.

One of the main key points when considering Critical Illness cover is not the premium, but the level of cover provided. Critical Illness cover is always going to carry fairly substantial premiums due to it's very nature but the amount of conditions offered by Insurance companies can differ wildly. For example,the cheapest premium may be with a company who offers 35 Critical Conditions that they would pay out for, for £70 per month. £70 a month is a fair amount to be paying each month, therefore it makes sense to pay for the best cover rather than the cheapest premium.

The very nature of any insurance (car, phone, travel etc) means that if you don't need to claim on it, it feels like a waste of time and money. But, when you do need it and you have got a decent policy that pays out, it'll be the best money you ever spent. Which is what happened to a recent client of mine that was paying £116 per month for Life and Critical Illness cover. He got diagnosed with a Brain Tumour, and his policy paid him out £245k within 10 days of his diagnosis.

[blueST]

Thanks, got your PM. Will reply soon.

[sidicks]

blueST said:

Thanks, got your PM. Will reply soon.

I'd add the following:

Do you have any life cover through your employment? If so, you may choose to take this into account when determining what cover you pay for.

Life assurance (actually a term assurance) is a very simple product - you pay a premium and receive nothing back unless you die within a specified term. Providing you are dealing with a reputable insurer, cost is the number one priority.

I'd recommend these guys who I bought a policy from a while back: http://tqprotect.co.uk/

They provided very competitive term assurance quotes with commission rebated back.

I'm sure numerous similar companies are available!

[blueST]

The product I've been offered is mortgage insurance for death and critical illness. So effectively, the amount it pays out decreases in line with the mortgage balance. I assume it was this, rather than life assurance, to keep the cost down??? I'll find out when I speak to him later in the week.

[sidicks]

blueST said:

The product I've been offered is mortgage insurance for death and critical illness. So effectively, the amount it pays out decreases in line with the mortgage balance. I assume it was this, rather than life assurance, to keep the cost down??? I'll find out when I speak to him later in the week.

That makes some sense. We have an interest only mortgage, so basic term assurance is required for us.

It might be worth checking whether you can purchase the life assurance and critical illness components separately to see whether you can get a better deal. This might also be advantageous if you need to cancel one of the components for whatever reason at some point in the future.

Sidicks

[Sarnie]

sidicks said:

That makes some sense. We have an interest only mortgage, so basic term assurance is required for us.

It might be worth checking whether you can purchase the life assurance and critical illness components separately to see whether you can get a better deal. This might also be advantageous if you need to cancel one of the components for whatever reason at some point in the future.

Sidicks

Although you can do it that way it never works out cheaper, as the risk is then spread over two policies. E.g you could get a CI and claim and then later die and recieve a pay out; therefore two claims for the insurance company to pay out on.

[Sgt Bilko]

Check the provisions in your pension, and what happens if you croak it whilst at work.

I have a CI and Death policy (which ever happens first it pays out) and then a 2nd Death policy. One was to pay off the house, the other to suitably cater for family. Then there's the pension element payout, and then death on duty for work and that other activity i do. If i get run over in tesco carpark however it remains to be the first two though.

[Stevemr]

I am not a fan of Critical illness, its a lottery, get one illness mortgage paid off, another which keeps off work for a couple of years get nothing.

You are better off with Pru serious illness cover. 180 odd illnesses covered.

But you are far better off with a proper income protection policy, own occupation index linked, with a suitable defer period to work with your sick pay from your employer.

PM me with your phone number if you want to discuss in more detail.

[Stevemr]

Also, if there are two of you with kids, consider two separate life policies, ives double the cover for only a tiny amount more in terms of premiums and enables you to write the policies in trust if appropriate, which can speed up the payment no end.