life insurance?

[supermarketworker]

dh is 40 this year and mid way through his crisis his latest being we should be taking some critical illness insurance, so im looking into it because i do like the idea tbh, now do i look at term or mortgage cover and is critical illness worth it - i am thinking yes but am also thinking some private medical insurance would be canny too ? we have about 12 yrs left on it 60k ish but im hoping to up the payments when ds starts school so hopefully less - can you end a policy earlier if you pay it off earlier? What do they ask about your past ? we are both in good health bar dh had a poorly foot tuther week he thought was gout . Finally can you organise it through a compare the market type site or would it be wise to contact your mortgage company first? I would really apreciate some advice before i ring someone...........

actually to add we both have life (death cover) with our employment so its actually more the ill side of things we would want covered or do they go hand in hand?

Mortgage cover is relatively cheap and makes a lot of sense ie. that your nearest and dearest wouldn't be worrying about paying the mortgage any more if you turned up your toes. You can take out mortgage insurance that decreases with the value of the loan or which is fixed at a particular value. You could ask your mortgage provider if they have policies as a first step, then you have something to compare. Straight life insurance you can buy anywhere.

Critical illness cover is far more expensive and I am not a particular fan having heard too many stories down the years of companies that argued about paying out because the illness wasn't covered by the policy or because they allege some other loophole in the terms and conditions. One acquaintance was diagnosed with lung cancer but, because they had not declared that they had some completely unrelated illness 10 years earlier, the insurance didn't pay out. You can certainly shop around for that, however.

I think it is more critically illness then as if either pegged it that's kind of covered.

It all boils down to what you can afford and what your attitude to risk is, really. I think for me (woman in her mid forties, non-smoker, fairly good health record) I was looking at about £50/month a few years ago and, since most of my family make it past their 90th birthday in disgustingly good health, I thought I could find a better home for £600/year.

Hi

Its sometimes very confusing to work all of this out. My suggestion would be to think 'what if'. Ie 'what if I had a serious illness (like cancer) that would mean lots of time off work?', 'What if my DH does?' 'What about if it was something less serious (like a broken leg) that meant time off work?' Look the impact on your finances and childcare arrangements.

You need to think about what work would pay in each of these cases and what you could comfortably live on? For example, could you live on just your income for a few months if your DH wasn't earning? Would either of your parents help you financially if you were seriously ill? That sort of thing. Once you have a clearer idea of the 'problem' you can find a way of insuring against it.

To answer your questions:

now do i look at term or mortgage cover

• at the very least cover your mortgage, possibly then also look at some over and above this, depending on budget.

and is critical illness worth it - i am thinking yes but am also thinking some private medical insurance would be canny too ?

• Critical illness insurance (CIC) pays a lump sum if you are diagnosed with a serious illness. 80% of claims are cancer, heart attack or MS. Its up to you to do what you want with the money - for example pay off the mortgage, allow the other one to take unpaid leave to care for you, adapt your home, one last trip to Disney World etc. CIC tends to come with free life cover as life cover is much cheaper to provide than CIC - think about how many people die young compare to getting a serious disease and surviving!
• Private Medical Insurance (PMI) helps pay towards the cost of private medical help. There are lots of different levels of this. Whether you think it is worth it depends on your opinion of the NHS!
• Also consider Income Protection Policy (IPI) - which pays you a £ amount each month you are off work through sickness or injury, no matter what type (so would cover broken leg example above). They are usually set up to 'kick in' once your company sick pay finishes. Its relatively expensive as most policies pay out at some point, but can be good knowing you will always have enough coming in to cover your bills.

can you end a policy earlier if you pay it off earlier?

Yes. You simply set it up for the longest time you think it will take to pay off your mortgage then once your mortgage is paid off, cancel it.

What do they ask about your past ?
It differs for different companies. In a nutshell - its anything that will make a claim more likely. They don't tend to like ongoing medical issues. So its probably best to push for a diagnosis for your DH ASAP.

Finally can you organise it through a compare the market type site or would it be wise to contact your mortgage company first?

Yes, you can use interweb, but seeing as you don't know what you want yet I wouldn't advise it. I wouldn't contact mortgage company either, as IME they don't tend to be the most competitive. The easier way to do it would be to go into a bank and say you want to talk to someone about life insurance.

Someone there should be ask you about your circumstances and make some recommendations. I would ask at a couple of places and get some ideas of what you want. You can then purchase through them or via the internet. I would suggest using an adviser as they handle the whole thing and you don't have to do any paperwork bar a couple of signatures, but then I'm lazy!

HTH