Critical illness or life insurance

[Hortuslover]

Evening all,

I have just recently changed jobs from NHS to agency work and no longer have death in service cover. Plan is to do agency while children are young and then hopefully get a job back with the NHS in a few years.

This has led me on to think about insurance cover should anything happen to me, as I didn’t feel like I needed it while employed by NHS.

I’ve gone through a compare website which has thrown in the option of adding critical illness cover but I can’t seem to get my head around whether it’s worth it. My understanding is they only pay out once, so if I was to die suddenly, paying for critical illness cover would have been pointless and quite expensive.

What does everyone else do for life insurance?

The point is it pays out if you are diagnosed with say cancer, giving you the time to hopefully get better without worrying about money.

I’m currently reviewing our policies and think we’ll take out a policy without c.i to cover the mortgage, then say a £30k c.i policy in addition to that. Both my friends that have been diagnosed with cancer have been so grateful for it.

We have both for DH. Both are set up to pay monthly, life until DD is 22 and critical illness, meant DH wouldn’t be able to work anymore, was for a set amount of years, not sure exactly.

Both are designed to help with loss of income. We have critical illness in the amount of DH’s net monthly salary and life 1/2 his net monthly income.

We also have a life insurance on the mortgage.

I have a family member who had a severe motorcycle accident leaving him with no way to continue working his job. But the bills are still there and his partner didn’t earn enough to cover all. His insurance money covers the shortfall.

Another case was a colleague whose stoke meant not only loss of income but also higher costs to rehab the house.

We calculated that with the mortgage paid off I would use the life cover income for security for DD until she finishes school while I may have to reduce hours or take a sabbatical to cope.

You should look at Permanent Health Insurance (PHI, not to be confused with PPI!) rather than critical illness - it pays an income of 755 of your salary indefinitely if you are unable to work for any medical reason, whereas the criteria for CIC is very narrow and a lot of companies have a bad reputation for failing to pay (i.e. for heart surgery you have to have 2 valves replaced to qualify).

Also consider Family Income Benefit for life assurance rather than straight term assurance or (no, no, no!) whole life cover. It's a reducing life cover that can have the maximum benefit payable in the early years tapering off to nil once your children have reached maturity. It's the cheapest cover so you get more cover for your money.

(Quite pleased with myself for remembering all that shit - haven't been in the insurance game for 12 years!).

75% not 755.

Forgot all about this as it was slow start, thanks for your replies.

I just have no idea where to start.
When I add on critical illness cover, it bumps the monthly cost to £107, am I doing something wrong? Or is that normal?

It is very expensive. Look at PHI.

You can have two separate policies if you like - one for life and one for critical illness, or a joint one.

If it's joint as you said it will only pay out once.
If you have two polices, it might cost you a bit more but it will pay out twice.

I took two policies 10 years ago for 150k each. I was diagnosed with cancer last year so the CI país out and I still have a life policy (which I would no longer be able to take after diagnosis).

Hope that helps.