income protection insurance

[tuscan_raider]

Hi,
I work full time as an IT consultant and have done for over 25 years. My wife is a full time housewife and we have 2 kids 12 and 9.

I think its about time I had income protection insurance. If I was injured or developed something which meant I could no longer work, we would be in serious trouble (big mortgage, in laws living with us etc)

I dont really know where to start, as
- dont generally use Financial Advisors (although probably should)
- I am fincially literate (career mostly in banking) , so I dont think I am easily persuaded to buy things I dont need
- happy to pay for advice rather than take input from somoeone who is paid to sell a particular product

So I started with money supermarket, and Googled it (came to find Exeter insurance). In both cases, Iwas contacted by an IFA who openly admitted they sell products they are paid to sell. One was with St James place, who I previously dealt with and ignored their advice as it was mediocre

Was useful in so far as they asked me to consider things I need to know
- how much sickness cover would my employer provide
- for how long could I survive on savings before Insurance kicks in
- how much per month would I need to cover (mortgage, bills, savings for holidays etc)
- until when would the cover need to last (until my pension kicks in I guess)

So here are a few musings
- does any one else buy this, and if so, how did you find it?
- what decisions did you make - e.g would you consider downsizing house, wife getting a job, cut back on outgoings etc
- anything else I need to think about
- policies Ihave seen include a load of stuff I dont need (e.g redundancy cover etc etc) - do you have to accept they all include such stuff which you pay for and dont need?
- any relevant experiences good or bad

Sorry for the long post - complex subject, and perhaps others will find answers helpful too

Edited by tuscan_raider on Wednesday 7th April 07:23

[BobsPigeon]

I've use The Policy Store several times over the years and found them to be very good for life and critical illness.

http://www.policystore.co.uk/

If you're running as a Ltd company it may be possible for the company to insure for the loss of a director and its tax efficient butt depends on what you want to do. Obviously you can't insure for redundancy as a contractor or simply not being able to find work.

[rossub]

I have it with Vitality and its meant to payout if I am physically unable to do my type of work.

There are exclusions like ME and the type of thing that are difficult to prove diagnostically, but that’s to be expected.

£2000 per month cover, deferred for 12 months after the initial claim and indexed (payments & payout)

£53 per month.

Seeing my brother in law develop MS and being made redundant as a result did it for me. It’s peace of mind mainly, as I know statistically the chance of claiming is thankfully low.

[TwigtheWonderkid]

rossub said:

£2000 per month cover, deferred for 12 months after the initial claim .

Building up some savings and having a long deferment period makes a big difference to the premiums, because you're basically ruling out a lot of things you could otherwise claim for, like broken legs, operations with a 6 month recovery time, etc.

A year's deferment, or even 2 years, means you're just looking to cover really serious stuff. But of course, you've got to have the money behind you to get thru that period.

[Welshbeef]

Another thing and I know it’s not to bank on but

Parents
In-laws
Family
Friends

When someone is in trouble they will help you out in anyway they can.

Put it this way if a good friend of yours was taken out of action for a year and would lose everything if you could would you help out? (£)? I’m sure most people have

[Sarnie]

Welshbeef said:

Another thing and I know it’s not to bank on but

Parents
In-laws
Family
Friends

When someone is in trouble they will help you out in anyway they can.

Put it this way if a good friend of yours was taken out of action for a year and would lose everything if you could would you help out? (£)? I’m sure most people have

In reality, none of the above is realistic. Most people have the ability to maintain their own outgoings for less than three months if they lost their income, let alone taking over someone elses outgoings.

Not taking out something that may be £10 per week and that may keep the roof over your head because you think your friends or family will look after you is simply putting your head in the sand..........

[rossub]

TwigtheWonderkid said:

rossub said:

£2000 per month cover, deferred for 12 months after the initial claim .

Building up some savings and having a long deferment period makes a big difference to the premiums, because you're basically ruling out a lot of things you could otherwise claim for, like broken legs, operations with a 6 month recovery time, etc.

A year's deferment, or even 2 years, means you're just looking to cover really serious stuff. But of course, you've got to have the money behind you to get thru that period.

I’m NHS, so 6 months full pay and 6 months half. They’d have to be particularly nasty to terminate my contract within that 12 month period.

[AJB88]

I'm also looking for something similar.

I'm 32, partner also 32 (not married). were about to move houses (I'm the owner) mortgage will be significantly bigger on the new house, I'm also the main earner.

I have a payment protection policy with Allianz which covers payments for Mortgage if I'm off work due to illness. But I read recently about a type of insurance that pays mortgage in full if you become critically ill etc? not to be negative but we lost my dad young to C. What is the best type of product.

I dont have life insurance etc.

[Sarnie]

AJB88 said:

I'm also looking for something similar.

I'm 32, partner also 32 (not married). were about to move houses (I'm the owner) mortgage will be significantly bigger on the new house, I'm also the main earner.

I have a payment protection policy with Allianz which covers payments for Mortgage if I'm off work due to illness. But I read recently about a type of insurance that pays mortgage in full if you become critically ill etc? not to be negative but we lost my dad young to C. What is the best type of product.

I dont have life insurance etc.

You are referring to Critical Illness Cover that would pay out a lump sum should you contract a Critical illness such as Cancer, heart attack or stroke along with numerous other conditions. We provides lot of policies like these for our mortgage clients, feel free to drop me a line if you want a chat

[dalenorth]

If it’s a LTD company then you can take out what’s called executive income protection where the premiums are paid by the LTD company.

Income protection and Life insurance does need independent advice so feel free to pm us if you’d like one of our advisers to explain the Pistonheads deal.

[tuscan_raider]

Hi, nothing to do with a company. I am full time employed by a large consulting org.

Thanks, I will reach out

[CinnamonFan]

I have in the last year bought life insurance and income protection as the sole earner currently.

Got it through lifesearch. Asked me questions I hadnt considered, didnt feel any pressure from them.

For 100k payout upon death of either of us and £750/month index linked income protection was £23.85/month. Over a 20 year period. Am 32. By the end of the 20 years il have no mortgage and have enough invested to cover the monthly costs for our lives if I were to die.

No affiliation, I just think the company was fair and knew their stuff.

[dalenorth]

£100k is a great sum if it covers all of your debt including mortgages and keeps any children fed and watered until dependency, but for many £100k wouldn’t go very far in today’s world.

Income protection is a great underadvised product that more people should consider, as it’s the highest claiming product we do. Covering essential expenses would be a great place to start.

Not everyone needs cover and each scenario is different, but my main piece of advice is to take advice, and ensure those advisers are not just selling you something to put some money in their pocket.

[Jiebo]

dalenorth said:

£100k is a great sum if it covers all of your debt including mortgages and keeps any children fed and watered until dependency, but for many £100k wouldn’t go very far in today’s world.

Income protection is a great underadvised product that more people should consider, as it’s the highest claiming product we do. Covering essential expenses would be a great place to start.

Not everyone needs cover and each scenario is different, but my main piece of advice is to take advice, and ensure those advisers are not just selling you something to put some money in their pocket.

The problem with Income Protection Insurance is that its a minefield, and you need a proper broker that you trust. It's not easy to understand the pitfalls and hence many people end up with garbage insurance as they opted for the cheapest £10 a month version off the shelf from a price comparison site.

My product needed manual underwriting, a letter from my GP, full medical, and a recorded conversation about my health history. Even then I had some pretty broad exclusions put in for any sort of mental health issue, because I once saw a counsellor for 30 minutes via my GP. Took about 3 months to get, pretty crazy.

[anonymous-user]

I have live insurance and that's it.(mortgage requirement) I also have enough in the bank to last two years,(and growing) which one could eek it quite handsomely I'd guess.

You can either pay a company money in hope, or save and invest and control your own future.

That's my view on these insurances

[rossub]

Jiebo said:

My product needed manual underwriting, a letter from my GP, full medical, and a recorded conversation about my health history. Even then I had some pretty broad exclusions put in for any sort of mental health issue, because I once saw a counsellor for 30 minutes via my GP. Took about 3 months to get, pretty crazy.

Similar here. Medical records provided and GP letter due to anxiety medication, along with the resultant Mental Health exclusion. Also blood taken for a Liver Function test, as I declared 30 units a week alcohol consumption.

[rossub]

RJWR said:

I have live insurance and that's it.(mortgage requirement) I also have enough in the bank to last two years,(and growing) which one could eek it quite handsomely I'd guess.

You can either pay a company money in hope, or save and invest and control your own future.

That's my view on these insurances

2 years is going to be pretty useless if you develop a lifelong disability that prevents you working. It’d be a life on benefits for you....recognising that the chance of it happening is slim.

I expect to be paying my policy for another 10 years and at that point I should hopefully no longer require it.

[hotchy]

I know a friend who used it for loosing a job. While he used to earn 100k the job centre would tell him to apply for minimum wage jobs that would put him worse off than not working. He got sorted after a year but without he would have been in big trouble. Iv got enough to keep me ticking over for around 2 years.

[Sarnie]

RJWR said:

I have live insurance and that's it.(mortgage requirement) I also have enough in the bank to last two years,(and growing) which one could eek it quite handsomely I'd guess.

You can either pay a company money in hope, or save and invest and control your own future.

That's my view on these insurances

Thats great, as long as you only expect your future to be two years long.....

[anonymous-user]

Sarnie said:

Thats great, as long as you only expect your future to be two years long.....

rossub said:

RJWR said:

I have live insurance and that's it.(mortgage requirement) I also have enough in the bank to last two years,(and growing) which one could eek it quite handsomely I'd guess.

You can either pay a company money in hope, or save and invest and control your own future.

That's my view on these insurances

2 years is going to be pretty useless if you develop a lifelong disability that prevents you working. It’d be a life on benefits for you....recognising that the chance of it happening is slim.

I expect to be paying my policy for another 10 years and at that point I should hopefully no longer require it.

yes, however, 2 years is enough time to work out a plan and I reckon it will be more like 4 and thats without liquidating anything that has a value.
Whatever that plan might be, we live in the UK and there is a system to catch folk.

it's not different to pet insurance, its almost a no no these days to not have it. As far as i'm concerned, certain types insurance exists for those unable to plan correctly. OP i'm not implying you are one of those, so no malice meant in my comment.

If income insurance works for you then excellent, i prefer an alternative method.

PS - not every policy will pay out what people might think.