Life insurance/income protection - is this too much to pay?

[knitandpearl]

We've never had life insurance/mortgage income protection etc but thought as I've now stopped work to be a SAHM for a bit we need to get on and sort it out as we're now relying on one income.

DH earns well but we have a big mortgage and food/council tax bills (fairly frugal in the rest of things, don't really go on big holidays or anything).

Got some quotes from a broker and life insurance costs are fine, paying about £30/month for lump sum of £100k plus paying off the mortgage if either of us dies.

We looked at critical illness cover and income protection cover - CI seemed quite restricted and you have to get signed off under a bunch of conditions (e.g. 'cancer but only if X severity') but would probably be cheaper.
Income protection seemed more inclusive but looks like we could pay £65ish per month to get EITHER £3k income after 3 months (so if unable to work for less than 3 months, just rely on savings, but after 3 months get £3k income) or £4k after 6 months.

Does this seem a lot to pay out for something (i hope) is unlikely to happen? This makes the total just under £100/month. We are both fit and healthy, but my worry is things like car accidents, brain damage, etc leaving DH long-term unable to work.

Also it seems far better to go for £4k after 6months and just make sure we have a few extra months of savings. (£4k after 3 months was more like £95/month which seems too much for me.) Am I wrong to think this? Maybe reducing the 'deferral' period is expensive because more people claim for things that are more temporary IYSWIM.

Anyway I'm a bit muddled now so any advice welcome!
I know the £3/4k income seems a lot but it would have to cover mortgage and bills - we could reduce it but feels like that sort of defeats the point of having peace of mind if we would still have to scrape. It's less than our current income, although we do save a chunk of that.

I'm not looking for ways to reduce outgoings at the moment; just wondering if there's something I hadn't thought of with these variables of income vs deferral period or any other more appropriate types of insurance.

I don't know anything about it but I'm interested in the reply's as I need to get this sorted out too.

We just have life assurance - £250k but it depends a lot on your job, dh is public sector so very secure (he gets full pay for a year of sickness and can work from home / part time too) I also have excellent employers who I know would let me work very flexibly with serious illness. I would certainly suggest that you get some sort of life assurance, at least the mortgage amount but ideally enough for two years living in addition, but the income protection is harder to call

Sorry to be dense but what is assurance as opposed to insurance?
Dh doesn't get too many benefits in his job - previously we've both had 'payouts if you die' in our contracts but not this time.

Oh,I just googled it! Yes worth looking into. It's the income protection I'm more clueless about what's a good deal...

Income protection is expensive... and like all insurance its a total waste of money.. UNTIL YOU NEED IT. Talk to your broker about the quote, what companies they are quoting from, ask for comparisons (make sure when you are comparing quotes you are comparing like for like and a cheaper premium isn't hiding some surprising omissions to the policy). As long as you can afford the premiums I would say well worth it for peace of mind.

I would go for the 4k after 6 months too.

For how long would your DH continue to receive his salary if he was off long term sick? That may give you a better steer for the appropriate deferral period.

£30 a month sounds quite a lot just for life insurance. We pay £50 a month and in that we have 2 x decreasing life covers (for mortgage) 2 x life cover of £150,000 each (we do life cover separately so it pays out twice) and then I'm covered for CIC and IP and DH has CIC, he can't get IP because of his job. No health issues, quite young when we took it out. We got ours through a broker.

www.moneysavingexpert.com/insurance/cheap-life-insurance/
Useful info here. Cavendish online saved us a fair bit of money.

Would agree that seems a lot for life assurance but you don't say exactly how big your mortgage is- assume this is for a hefty sum, or there are other factors which would increase your premium?

I’m currently claiming on my Income Protection policy for a long term illness which came completely out of the blue and would not have been covered by Critical Illness cover. So yes, I’d say go for it. It’s tough enough being ill without having to worry about money, and the income from this makes all the difference.

We're winning on DH's income protection after best part of a year off with cancer (now in remission and back to work). We got it rather than critical illness because injury was more likely than illness (physical job) and nearly needed it for a broken arm. We also made sure I had decent life insurance as a SAHM because we realised the cost of a nanny to allow DH to work if I were dead was rather prohibitive so got a fairly large amount reducing over the term...

Mortgage is over 300k.
random sorry to hear about the cancer but glad it's in remission and you had the insurance! Our broker was pleased with us for already realising the cost of me being the childcare and having taken that into account.
sunseed good idea, I'll get dh to check the sick policy

We haven't got wills either, so that's the next thing to sort!!