Viewing 19 posts - 1 through 19 (of 19 total)
  • Life insurance… income protection… ARGH!
  • messiah
    Free Member

    Wife nipping my heid… with probable good reason as I’m dragging my feet over this as the mere thought of doing anything about it is horrible 🙁

    Anyway – recently gave up a staff job with all the benefits etc to go consulting. Question is how much life insurance to go for and what about income protection etc?

    Obviously no death in service anymore so increase life insurance to what figure… 10 x salary? Any rules of thumb or advice greatly appreciated.

    ART
    Full Member

    No doubt someone sensible will be along in a minute. But my 2p worth. I didn’t really think about this much until I left my civil service job and all the benefits that went with it. Obviously it depends on your circumstance (kids etc) and attitude to risk. My cyncial view is that most insurance that isn’t a stat/ legal requirement is going to shaft you. For every story of someone being saved by their income protection insurance there’s another where the ‘small print’ got them. So my approach to income protection has always been to save/build up a fund sufficient to cover job loss/ lean period… I’m assuming I’m not going to get ill of course for any prolonged period …. Life insurance I do pay a small amount each month and the payout would be to the value of our mortgage when we took it out.

    Sure someone will be along shortly with some proper advice. 😉

    Sidney
    Free Member

    I’m contracting and have recently got life assurance as we bought a house. Got it for the value of the mortgage.

    Thought about income protection but decided against it in the end – to costly for me.

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    MrTall
    Free Member

    Insurance is just peace of mind really. It’s worthless unless you need to claim and obviously we all hope we never will. Then suddenly it can be the best money you ever spent. People insure their cars, houses etc but are far more likely not to insure their life or their future income.

    Life Assurance is generally pretty cheap (assuming you’re in good health and not too old) and generally the level is set at an amount which will pay off the mortgage, plus a bit more to help with the period after a death. Usually done up to age 60/65 for most folks.

    Income Protection is less common as it can be pretty expensive (particularly if you are not a low risk office based worker etc) but once again can be worth its weight in gold should you ever need to call upon it. Use a reputable company and look at the smallprint, most companies have a good track record of paying out in the event of a big problem (maybe not so good if it’s something like a bad back etc which is difficult to prove).

    Just remember that you are far more likely to get a seroius illness or life changing accident before 65 than you are to die, hence why life assurance is cheap and critical illness and income protection are far more expensive.

    chugg08
    Full Member

    Through hard experience its worth taking out Life and possibly Critical Illness insurance. Income Protection is a personal thing depending on how employable you are, the market and your willingness to travel.

    With regards the amount, again its based on personal circumstances.

    Best to contact an IFA / Wealth Manager and work with them to assess your needs and appetite to risk rather than accept advice here.

    Some IFA’s are free and paid commission by the insurance provider although its questionable how “Independent” they are as less reputable ones may go for the max commission as opposed to the best policy. Others will charge a nominal fee but they are more likely to be independent. If you pay them, make sure you check that they have sacrificed their commission – in the end its you who pays them so make sure its not twice…

    messiah
    Free Member

    Cheers.

    I have two kids so the dependents is the tricky bit. I currently have life insurance for the mortgage but the heid-nip is for more… conspiracy to bump me off maybe 🙄
    I would also want to cover her as if something happens to me I would need to pay for the kids care… hence the question.

    Income protection I can’t see much point in – for the cost of protection perhaps I should set up something for a similar monthly figure so if I cannot work for a bit there is a pool of cash to draw from?

    I guess speaking to IFA is the next step.

    thegreatape
    Free Member

    Mine works out at enough to pay off the mortgage then 3 years gross salary.

    MrTall
    Free Member

    You can do a Family Income Benefit Plan which pays an income after your death, instead of a lump sum (both is a good idea – no mortgage or debt and then an income to help once the breadwinner is gone).

    However, neither will do anything about loss of income due to illness or accident.

    mastiles_fanylion
    Free Member

    How about this for a question….

    Currently expecting to get a windfall that will (more or less) pay off the outstanding mortgage but we have existing life cover to cover the mortgage. The insurance costs about £30 per month and will pay out on a sliding scale on the calculated remaining value of the mortgage should either my wife or I die/critical illness.

    Do I keep paying in as an additional ‘insurance’ that would mean remaining family get a pay out (but bear in mind that at the end of the mortgage term the value of the insurance will be £0.00). The only way a payout would be due would be if a claim was made before the mortgage was originally due to be paid.

    totalshell
    Full Member

    life insurance.. ironically gave it up after having two heart attacks and a stroke.. when it happens mrs will mope about for a while then shack up with some hunk.. good luck to her but i aint funding it..

    underthethumb
    Free Member

    We ended up with two policies, one for me and one for the wife, as a joint policy only pays out on the first death or crtitical illness, we both have the mortgage plus 3 x my annual salary as the payout. So if one of us crokes it then the other is able to manage for a while and, god forbid, we both die in some fiery painful car wreck then our kids custodians/god parents have a few $100k to help raise and look after the kids.

    Remember what you are potentially asking someone to do if the worst should happen, you won’t care as you will be 6ft under.

    We chose to skip income protection as too expensive and weighed up the risk that if one of us was ill, we could survive on the one payout and the other continue to look for work.

    Make sure also to have a will which reflects the decision you take.

    Blimey that has put me on a downer…..

    deadpixel1
    Free Member

    I would suggest you get life and critical illness cover. Life insurance only pays when you die. mortgage protection only pays your mortgage. life and critical illness cover. pays you whether you die or get critically ill. So if you (heavens forbid) ever get cancer, you will get a cash lump sum upon diagnosis which you can use to pay your mortgage off, pay for advanced medical treatments, go on a holiday or what ever you want. You can read more about it on this blog: Critical illness cover

    cheers_drive
    Full Member

    Critical illness cover is quite limiting with very specific requirements to meet the payout, it is also underwritten at claim so there is also a chance that it may not pay out.
    Permanent Health Insurance (PHI) is better if you have no underlying problems as it is underwritten when you take it out so you are much likely to get a payout if you qualify.
    I have Life insurance and Unemployement income protection (it’s better to self fund this if you can but I can’t) but have no kids. In the future I would like PHI but I have already been refused due to having seen a cardiologist about a irregular heartbeat. Despite it being diagnosed as having a healthy heart structure and the irregular beats were faitly normal this still counted against me with the underwriter. I’m now trying to get a second opinion but the NHS aren’t interested as I’m apparently healthy. ❓

    dukefaxo
    Free Member

    I have critical illness cover and also have similar type of policy that was mortgage.. My adviser advised me that I had to have.. Currently I remortgaging so my new mortgage adviser is sorting new covers out at the moment.

    Income Protection Insurance Australia

    footflaps
    Full Member

    My work policy is:
    4x salary for death in service
    0.75x salary in event of illness which means I can’t work (until retirement)

    totalshell
    Full Member

    as i have had multiple opportunities to do so, you’ dthink i’d made a fortune on, critical ilness insurance.. i ll laugh now.. these insurance boys know fine print like it was written by them for them to use.. which of course it is.

    i would very carefully and with full honesty read the inclusions and exclusions following a heart operation mine refused to pay out, as 10 years previously i’d had an ecg and one outcome of an ecg is an operation .. so therefore i should have known that i might need an operation.. 10years later they had full disclousure of my medical records and bingo no cash..

    so with two kids mrs and property, bad health and self employed i dont have insurance.. a, its miserably expensive b, mrs is young and good looking she ll have 3 properties and my pro 5 when i go so i guess they ll be plenty of guys sniffing around so she wont be short of cash..

    breatheeasy
    Free Member

    I would also want to cover her as if something happens to me I would need to pay for the kids care…

    Someone gave me a good tip a while ago – if you’re thinking of life insurance for yourself and your other half check the price out for two separate policies, it was a fiver a month more for me and the missus to have individual life insurance rather than a combined one.

    First one to pop the clogs covers the mortgage so you’ve got a roof over your head. If second one goes then that money can be used for the kids.

    ronejony
    Free Member

    Life insurance is basically an income-protection measure. If the insured person is the sole bread earner of the family and he passes away all on a sudden, the family will not be left in the lurch, at least financially.

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    benefits of whole life insurance

    TiRed
    Full Member

    Life Assurance is relatively cheap. This is a bet that you won’t die, conditional on your age and past medical history. Get it while you are young. Assurance because it will happen. Companies are very good at assessing the odds, and actuaries get paid a lot to do some sums using geometric progressions. Competition is high so prices are driven down.

    Income protection is a crap shoot. The odds are pretty much unknown and often not deducible from your current history (A familial history of nasty disease and a predilection for BASE jumping aside). Hence premiums are high, and payouts can be very large. That’s why the normal response is “I can’t afford that”. It’s a bit like insuring 17yo males to drive. Companies don’t really want the business, or don’t want to carry the risk.

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