Critical illness cover etc

[the-norseman]

Morning all,

looking for some advice, I'm 34, my partner is 34 as well, we have an 10 month old between us and she had a 11 year old. I work full time she doesn't, I'm the home owner, mortgage is in my name etc currently owe about £280,000 on the mortgage.

I'm in reasonable health, apart from HBP, doctors have stuck me on a 2mg tablet for it and dont seem bothered, I'm hoping its just weight related as I've put some back on recently (lost a hell of a lot a few years ago) due to having the baby and the change of lifestyle that comes with being a dad. Me swanning off to the gym/swimming/BJJ have become a thing of the past at the moment.

I was chatting to a friend of mine who is older the other day and hes got life insurance, critical illness cover etc and got me thinking I need to start thinking about these things! I do get death in service cover from work but that is it at the moment.

What should I be looking for? is life insurance better than critical illness cover or vice versa?

If I was to become ill right now, I'd get 6 months full pay from work and then we would be in the dog doo. What cover would I be best looking at.

[Zetec-S]

It depends on your attitude to risk, and to a large extent your own finances. For example, you say you get 6 months full pay, what happens afterwards, SSP? In that 6 months of full pay how much could you reign in your spending, could you stretch it out to 9 or 12 months? How much earning potential does your partner have if it really was needed?

I have a life insurance policy, IIRC it's around £10 a month with a £200k payout, which would be enough to clear the mortgage and leave Mrs ZS with plenty spare. Plus 3 months death in service. But then we don't have kids and she has a decent job. Would your DIS be enough to clear your mortgage and any other debts? I'd say at the least you should look at life insurance, if the worst happens you would want your partner and kids to be reasonable comfortable without a big mortgage and potentially other debts hanging over them.

Critical illness is a tougher decision IMO. When we did our mortgage renewal recently, we were quoted around £100/month as an estimate, but that was a very basic quote and wasn't based on any specific details/personal circumstances. Much harder to justify for us, as we could probably scrape by on 1 wage, but again we don't have kids to think about.

[TwigtheWonderkid]

You cannot rely on death in service cover. Most people who die within working age don't die in service. They get ill, cancer or whatever, and have left work by the time they die a couple of years later. Death in service is great for the heart attack / car accident type death, but that's it. Ignore death in service benefits when deciding on the need for life insurance and how much life insurance you need.

[the-norseman]

TwigtheWonderkid said:

You cannot rely on death in service cover. Most people who die within working age don't die in service. They get ill, cancer or whatever, and have left work by the time they die a couple of years later. Death in service is great for the heart attack / car accident type death, but that's it. Ignore death in service benefits when deciding on the need for life insurance and how much life insurance you need.

Yeh I suspected that.

[craig1912]

I would get life assurance of a term at least until your kids are likely to be through university. It’s cheap and easy to do.
I personally wouldn’t get CI insurance but would consider Income Protection insurance to cover your salary after work stop paying it.

[xx99xx]

I get 6 months full pay, then 6 months half pay for long term sick but I still have CI and life insurance.

The life insurance will cover the remaining mortgage. The CI plan also covers kids with a critical illness which is nice to have.

My advice would be to get some insurance and maybe CI cover soon as premiums go up the older you are. And you never know when you might need it! I am not a financial advisor.

[marked1]

My advice.

I am someone who is mid 30's. I was a couple of months away In getting my first house so I was going to be getting life insurance when that went through. Unfortunately I got struck with the dreaded C 6 months ago.

My priority now is getting better. Everything else is on the back burner. Sick pay has now dried up and I have now started to use my house deposit to pay rent and daily hospital visits when I need etc. It's a bit of a kicker but like I said getting better in the main priority. Money comes and goes.

I don't think I will be in a position in getting a mortgage anytime soon due to my current condition. Maybe I was a bit lax in not getting life insurance earlier. I spoke to many people on the ward who had critical cover and they all got paid out after a letter from their consultant was sent with cancer diagnosis. Most between 20 - 50k with no hesitation. They all said it took the burden out of money worries so my advice is to get it. The majority of the 20 to 30 year olds I spoke to didn't have it, the older generation did.

[fiatpower]

I took out combined life insurance and critical illness cover for my wife and I when we got our mortgage at age 26. I’ve got it set so that in the event that I get a critical illness it pays out £100k, if I subsequently die it pays out another £100k. If I just die outright without getting sick it pays £200k. The same goes for my wife.

That amount would comfortably cover our mortgage now with a sizeable chunk left over and costs us both £30 a month. It definitely feels better knowing it’s covered. I’m waiting on an ultrasound for a cancer check and if it’s the worst then at least we’ll be covered.

[Caddyshack]

marked1 said:

My advice.

I am someone who is mid 30's. I was a couple of months away In getting my first house so I was going to be getting life insurance when that went through. Unfortunately I got struck with the dreaded C 6 months ago.

My priority now is getting better. Everything else is on the back burner. Sick pay has now dried up and I have now started to use my house deposit to pay rent and daily hospital visits when I need etc. It's a bit of a kicker but like I said getting better in the main priority. Money comes and goes.

I don't think I will be in a position in getting a mortgage anytime soon due to my current condition. Maybe I was a bit lax in not getting life insurance earlier. I spoke to many people on the ward who had critical cover and they all got paid out after a letter from their consultant was sent with cancer diagnosis. Most between 20 - 50k with no hesitation. They all said it took the burden out of money worries so my advice is to get it. The majority of the 20 to 30 year olds I spoke to didn't have it, the older generation did.

Good advice. We often have a hard time convincing people that they need to invest in critical illness cover but it really does work. Aviva have a great £2pm bolt on with global cover, this can pay up to £2m for treatment that is available abroad but not on the nhs.

My friend got £500k payout on his critical policy when he had a heart attack at 43….6 weeks later he was back at work.

[fiatpower]

I should add that the £30 a month is the cost for the length of the 35 year policy. This works out to be £12,600 as a total. For the amount of potential payout and the weight lifted I’d say it’s worth it. Although the cost per month goes up as you get older obviously.

[Sheepshanks]

I can't say we ever did anthing about this, but now you've got kids people say you should also think what would you do in terms of looking after them if something happened to your partner.

Maybe you've got extended family around, but if not, how flexible is your job - would you have to pay for care and other domestic stuff to be able to continue working?

[Caddyshack]

fiatpower said:

I should add that the £30 a month is the cost for the length of the 35 year policy. This works out to be £12,600 as a total. For the amount of potential payout and the weight lifted I’d say it’s worth it. Although the cost per month goes up as you get older obviously.

A lot of decent policies can be fixed cost for the term, it is well worth having if young enough.

Also policies should be bought individually and not jointly - that way you can assign the policy to a trust and remove it from iht calculation and does not need to follow a will. Critical normally pays out on death or terminal illness too and you can split the proceeds so that only one death it goes to trust but often people do die of critical illnesses so often having in trust to the partner can avoid iht.


Childrens critical of 25k is often included with decent policies.

[craig1912]

Your partner should have cover too as if she became ill and couldn’t work/ look after children you need support.
Some I do here but CI or Income Protection is probably more important than life cover as you are far more likely to need them.

https://www.unbiased.co.uk/news/protection/

[Caddyshack]

craig1912 said:

Your partner should have cover too as if she became ill and couldn’t work/ look after children you need support.
Some I do here but CI or Income Protection is probably more important than life cover as you are far more likely to need them.

https://www.unbiased.co.uk/news/protection/

Yes, and you are still here to experience the st storm when the wheels fall off whereas you are spared that when dead.

[the-norseman]

Just looking into this now got a few questions.

Life insurance, one of the comparison websites said the term should be for as long as your mortgage lasts, which at the moment is 28 years, the total amount should be your salary x how long you want to cover dependants, what would you say is the time id like to cover dependants?

Critical illness, it asks for an amount, am I best just sticking to the mortgage amount or a little more?

its a mine field knowing how much your gonna need etc.


Just to add to this, my dad died of cancer a few years ago, they wouldn't pay out his critical illness cover (prudential) as he was in the last 2 years of his policy.

[Mr Pointy]

Check if the CI amount rises with inflation as you'll find that ramps the payments up.

[BoRED S2upid]

the-norseman said:

Just looking into this now got a few questions.

Life insurance, one of the comparison websites said the term should be for as long as your mortgage lasts, which at the moment is 28 years, the total amount should be your salary x how long you want to cover dependants, what would you say is the time id like to cover dependants?

Critical illness, it asks for an amount, am I best just sticking to the mortgage amount or a little more?

its a mine field knowing how much your gonna need etc.


Just to add to this, my dad died of cancer a few years ago, they wouldn't pay out his critical illness cover (prudential) as he was in the last 2 years of his policy.

CI isn’t going to pay off the mortgage amount as you can survive and go back to work as the above poster said it’s a lump sum £20-£50k something like that.

Life insurance pays off the mortgage and or a sum per month for your partner and kids until they are 18? 21? It’s up to you. All these variables will increase or decrease the monthlies.

[craig1912]

BoRED S2upid said:

CI isn’t going to pay off the mortgage amount as you can survive and go back to work as the above poster said it’s a lump sum £20-£50k something like that.

Life insurance pays off the mortgage and or a sum per month for your partner and kids until they are 18? 21? It’s up to you. All these variables will increase or decrease the monthlies.

Of course CI can pay your mortgage off. It pays out (read the terms and conditions)even if you do survive and go back to work and yes I would set it at least your mortgage amount.
Life assurance (or term assurance) pays out when you die and is a lump sum. It can be decreasing over the course of your mortgage but I would always choose level term assurance which pays the same throughout the term of the policy.
There is such a thing as Family Income Benefit which pays a sum per annum for the remainder of the term if you die.
Don’t discount Income Protection as you are more likely to be off work for six months or more than die.

[ydraheel]

My Critical Illness certainly paid off my mortgage.

I'm single with no dependents, but I still opted to take out a critical illness/Life insurance policy which would pay out the total sum insured on diagnosis of certain illnesses (Cancer, Stroke etc). I also took out income replacement.

I had what I thought was a stroke in 2011, but was finally diagnosed with MS after lots of investigations.

Initally had some fun getting them to pay out, as there was some confusion over whether it was a stroke or MS (even though both were covered they refused to pay), but my consultant eventually wrote to them telling them in no uncertain terms it was a definitive MS diagnosis and I got a cheque about a week later that more than covered the Mortgage.

So I was mortgage free from age 38, and touch wood, the MS isn't currently causing me too many issues.

If it does progress and I am unable to do my job, the income replacement will kick in and pay out 2/3 of my salary monthly until I am 65.

[BoRED S2upid]

BoRED S2upid said:

CI isn’t going to pay off the mortgage amount as you can survive and go back to work as the above poster said it’s a lump sum £20-£50k something like that.

Life insurance pays off the mortgage and or a sum per month for your partner and kids until they are 18? 21? It’s up to you. All these variables will increase or decrease the monthlies.

Ignore my comment I was having a senior moment. If it can pay out £50k it can of course cover your mortgage (mine doesn’t) life insurance does that if I die from said critical illness.