Life and Income Protection - Thoughts?
Discussion
Afternoon All,
I’m in the process of purchasing a new house purchase and have discussed life and income protection with the advisor and I’m keen to gather some thoughts from the wider audience. I’m traditionally quite relaxed with my approach to risk and don’t believe in insuring every eventuality.
In my earlier years I’ve had similar conversations, looked at the cost and thought no thanks, I’m young free and single and I’m happy to take the risk.
Fast-forward to today and I’m a 37 year old fit and healthy married man with a new 4 month old baby boy and a £400k mortgage and I’m wondering whether I should be reassessing!
What approach do others take? Am I being reckless having no insurance?
They all seem pretty expensive to me other than maybe the minimum cover.
The options that have been presented are as follows:
FCA Best Advice Protection Recommendation:
Joint Life and Critical Illness Mortgage Protection = £199.28
Income protection payable after 3 months linked to RPI until age 70 = £108.72
Premium Driven Protection Recommendation:
Joint Life and 50% Critical Illness Mortgage Protection years = £136.71
24 month Income protection payable after 3 months linked to RPI until age 70 = £36.54
Minimum Level of Cover:
Joint Life Only Mortgage Protection = £28.23
I’m in the process of purchasing a new house purchase and have discussed life and income protection with the advisor and I’m keen to gather some thoughts from the wider audience. I’m traditionally quite relaxed with my approach to risk and don’t believe in insuring every eventuality.
In my earlier years I’ve had similar conversations, looked at the cost and thought no thanks, I’m young free and single and I’m happy to take the risk.
Fast-forward to today and I’m a 37 year old fit and healthy married man with a new 4 month old baby boy and a £400k mortgage and I’m wondering whether I should be reassessing!
What approach do others take? Am I being reckless having no insurance?
They all seem pretty expensive to me other than maybe the minimum cover.
The options that have been presented are as follows:
FCA Best Advice Protection Recommendation:
Joint Life and Critical Illness Mortgage Protection = £199.28
Income protection payable after 3 months linked to RPI until age 70 = £108.72
Premium Driven Protection Recommendation:
Joint Life and 50% Critical Illness Mortgage Protection years = £136.71
24 month Income protection payable after 3 months linked to RPI until age 70 = £36.54
Minimum Level of Cover:
Joint Life Only Mortgage Protection = £28.23
eybic said:
I think the way to look at it is that if you were to drop dead tomorrow, would your other half be able to pay the mortgage on her own? If not then you should get life insurance imho.
Dropping dead is, dare I say it, the preferable option. As you say, life cover will pay out and assuming you're insured enough can clear the mortgage and even give a small cash sum.What if you have a heart attack, stroke, cancer or some other illness that prevents you from working? Even worse, what if you need care which means your partner cannot work to make up the shortfall. How will you pay the mortgage, bills, put food on the table etc.? I know I sound like the prophet of doom/insurance salesmen.
At the end of the day you need to weigh up the monthly payments with your risk appetite. Personally, I'm insured up to the eyeballs. I don't look at the cost and just hope I never need it!
eybic said:
I think the way to look at it is that if you were to drop dead tomorrow, would your other half be able to pay the mortgage on her own? If not then you should get life insurance imho.
This.As soon as I had my first child I took out life and critical illness insurance. If the worst happens it would be a pretty horrible situation to leave your other half in otherwise.
Thanks for all the feedback …. much appreciated. Always good to gather opinions, it seems like the advice is a resounding ‘get some insurance’!
Although I still think I’ve got to balance premiums vs. risk rather than getting ‘as much as I can afford’ (surely £300 a month / £3600 per annum is a little punchy!)
My wife couldn’t afford the mortgage alone.
I’ve always had an ‘anti-insurance’ approach to most things (I don’t bother with travel insurance for example) … my should the worst happen and I pop my clogs ‘no insurance’ plan was along the following lines:
• 12 months net salary savings floating around buying enough time for my wife to sell the big house.
• There is enough equity in the house to sell and buy another place (or move into our buy-to-let). I know it’d mean disruption but that’s the risks you take.
Although I still think I’ve got to balance premiums vs. risk rather than getting ‘as much as I can afford’ (surely £300 a month / £3600 per annum is a little punchy!)
My wife couldn’t afford the mortgage alone.
I’ve always had an ‘anti-insurance’ approach to most things (I don’t bother with travel insurance for example) … my should the worst happen and I pop my clogs ‘no insurance’ plan was along the following lines:
• 12 months net salary savings floating around buying enough time for my wife to sell the big house.
• There is enough equity in the house to sell and buy another place (or move into our buy-to-let). I know it’d mean disruption but that’s the risks you take.
Insurance seems expensive until you need it.
My situation is 36, married, no kids. I’ve life cover through my employer for 5 years salary. Our house is paid for so that with savings should take the heat off my wife should the worst happen.
However, as a pilot, I’m much more likely to lose my medical than drop dead, so that needs insuring, too. They also provide cover of 2 years salary should I lose my medical certificate. I supplement this with a policy that will provide about 6k of income a month for 4 years, my thoughts being that I can either retrain with it, or use the 2 year payout to buy into a business and the monthly income to supplement while I find my feet.
It’s fairly well priced through my union, about US$1000 a year. I’m amazed when I speak to guys that don’t have it.
Having used travel insurance (7 quid a month for my wife and I) to pay out nearly £100k in medical bills a few years back, I’m very happy to invest in the peace of mind. Touch wood, I don’t need to call on it, but when people depend on you, it seems like the responsible thing to do.
My situation is 36, married, no kids. I’ve life cover through my employer for 5 years salary. Our house is paid for so that with savings should take the heat off my wife should the worst happen.
However, as a pilot, I’m much more likely to lose my medical than drop dead, so that needs insuring, too. They also provide cover of 2 years salary should I lose my medical certificate. I supplement this with a policy that will provide about 6k of income a month for 4 years, my thoughts being that I can either retrain with it, or use the 2 year payout to buy into a business and the monthly income to supplement while I find my feet.
It’s fairly well priced through my union, about US$1000 a year. I’m amazed when I speak to guys that don’t have it.
Having used travel insurance (7 quid a month for my wife and I) to pay out nearly £100k in medical bills a few years back, I’m very happy to invest in the peace of mind. Touch wood, I don’t need to call on it, but when people depend on you, it seems like the responsible thing to do.
It’s all going to depend on your attitude to risk, but I’d say you need to consider, mortgage protection (full or partial cic), family income benefit, income protection (maybe a limited payment period to keep costs down)
If you want a second opinion, we’re specialists in this area so happy to get one of the guys to help you out.
If you want a second opinion, we’re specialists in this area so happy to get one of the guys to help you out.
rockin said:
??????
Nothing exotic, but very easy to rack up in the States.. This was 7 days, no surgeries, just drips, medication and doctors’ visits. I’ve a mate who racked up over a million after a car accident, over the course of a few weeks. It’s utter madness, and the canal of insurers is nothing short of a cartel over there.
John Laverick said:
Thanks for all the feedback …. much appreciated. Always good to gather opinions, it seems like the advice is a resounding ‘get some insurance’!
Although I still think I’ve got to balance premiums vs. risk rather than getting ‘as much as I can afford’ (surely £300 a month / £3600 per annum is a little punchy!)
My wife couldn’t afford the mortgage alone.
I’ve always had an ‘anti-insurance’ approach to most things (I don’t bother with travel insurance for example) … my should the worst happen and I pop my clogs ‘no insurance’ plan was along the following lines:
• 12 months net salary savings floating around buying enough time for my wife to sell the big house.
• There is enough equity in the house to sell and buy another place (or move into our buy-to-let). I know it’d mean disruption but that’s the risks you take.
Although I still think I’ve got to balance premiums vs. risk rather than getting ‘as much as I can afford’ (surely £300 a month / £3600 per annum is a little punchy!)
My wife couldn’t afford the mortgage alone.
I’ve always had an ‘anti-insurance’ approach to most things (I don’t bother with travel insurance for example) … my should the worst happen and I pop my clogs ‘no insurance’ plan was along the following lines:
• 12 months net salary savings floating around buying enough time for my wife to sell the big house.
• There is enough equity in the house to sell and buy another place (or move into our buy-to-let). I know it’d mean disruption but that’s the risks you take.
Well, you have a not-massively-unreasonable approach there......your BTL clearly gives some options.
I have a similar approach. I fear paying stacks in premiums only for insurance to find an excuse not to pay out. Had a similar approach to critical illness policies. What will be, will be.
But.....
Imagine the worst case scenario of you being around but unable to work.
Would it work for your wife to sell the family home and move all of you to the BTL?
If so....fine.
If it sounds undesirable....maybe take some insurance!
Also check what insurance you might get with work. Our “death in service” benefit is pretty good (albeit that is not critical illness, etc).
No easy answer. It is very easy to be pressured into thinking you need everything covered.....and maybe you do, but as you say, that comes with a cost.....
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