Critical illness £130 a month- do we need?

[minimini358]

Just looking for some opinions after speaking to our mortgage broker who referred us to their financial advisors for life insurance.

They have basically put the fear of god into us that we need critical illness cover of at least £100,000 in addition to our life insurance. This is coming out at £130 a month which whilst we can afford it at a push, it will mean we are really close to having no disposable income.

We have a 20 month old daughter so want to do what's right to protect her but also with the cost of living we are feeling the squeeze like most. I'm just mindful that even though these are 'independent brokers' they may get kick backs from more insurance products they sell.

Thanks for you advice!

We're in a similar situation and have been quoted around the same for critical illness cover which seems quite high per month! We were also quoted life cover for £20 a month. After speaking to a few friends it seems they do have some kind of cover whether it's life cover, critical illness or both.

Do you have a good sickness package with your employer? Could this cover the mortgage cost for a decent amount of time? If so, it may not be worth taking out critical illness?

I think we are just going to get life cover however not completely decided yet, so will be interested to see other opinions on this as well!

@Mal02 Yes that's exactly like us- so much more expensive for the critical illness than the life insurance but according to our broker it's because it's much more likely at our age (early 30s) that we will be critical ill than pass away. It's a nightmare as I'm worried I'm tempting fate should we not get it!

We have 12 months full pay for sickness on both of our work contracts.

They definitely get money for selling you these policies. I went with a income protection plan rather than critical illness as it was a bit less costly, and I get decent sick pay from my employer.

We went with life insurance only as we get a years full pay and if we couldn't return would get our pensions which is enough to clear the mortgage. It depends what your employer offer if it's only 1 month full pay you really need it

Yes sounds like we're in a similar situation. We're also mid 30's and both have 6 months full pay and 6 months half pay for sickness.

We were also quoted for income protection which was around £100 I think for that and life cover.

It's very difficult knowing what to do for the best!

As another poster above mentioned, mortgage brokers do get money for selling you these policies.

Ours gave us a hard sell, many years ago, to take out a critical illness policy. We decided not to, just got basic life insurance cover instead for around £20. We’re now at a point where should we not be able to work we’d just do a big downsize and release a lot of equity in our property.

You sound as though your current companies will give you a good cushion should you become critically ill.

I would check what sick pay you both get from employers. In my case I get 6 months full pay, then six months half pay so a pretty generous cushion.

£130 per month is a huge amount. I'd be tempted to forgo the critical illness and put the £130 per month into an emergency pot instead.

Wish I had taken out critical illness ! But I guess the % of ever actually having to use it is low.

I’ve had a mortgage for over 20 years and never had critical illness cover. I have never had life cover either. I think if you get good life cover from your employer / pension then less worth it. £130 seems massive, what would you get for this if you claimed?
youcould just save this amount in an account instead as your savings? then if you never need it it’s there for you to spend on a cruise or whatever in 20 years time?

We didn’t. When we looked at the terms and conditions there was a lot of exclusions. I think one policy even excluded cancer so basically if you got cancer they wouldn’t pay out. We decided to out some away separately for if one of us became ill. Unfortunately we never did put it away separately but I wish we had just in case.

We have life insurance to cover the mortgage and critical illness which will pay out 40k (a years worth of one of our salaries).
We couldn't afford a big lump sum payout so thought this was a good compromise. We pay £50 for both insurances.

It is important to have critical illness cover but it doesn't have to be a big amount, just a financial cushion if you were ever to need it.

Who is it with?

Am with Vitality for mine and it's nowhere near that high. Also get loads of free stuff when you join and huge discount from Champneys!

A financial advisor tried to sell my husband a policy recently that was very expensive. Do shop around.
We stuck with our original policy as decided it was enough. We are now in the unfortunate situation of having to claim from it.

No don't. There will usually be some small print clauses so they can get out of paying even in the event of illness.

We went for life insurance, and I think a £20k critical illness/ injury payout, which isn't much but better than nothing. The total cost wis £31 pm. The good crical illness cover was way too dear. We both have good sickness policies, which was a factor in the decision.

It seems like a lot of money, but if you ever needed to claim because you're critically ill then it's a complete life saver. I've needed to claim and it's meant being able to keep my children in their home, near their schools even though I can't work much any more.

It's given me the financial freedom to prioritize my health and hopefully live longer than I would have done if I was working full time and running myself into the ground still.

I've got it but mainly because my family is genetically disposed to several cancers. I don't have a spouse or parents (or kids) and worried that if I were to have to take time off for chemo/radio, then I wouldn't be able to pay my mortgage and living costs. My employer at the time had a really shoddy sick pay policy. I'm now somewhere where it's a lot better, but have kept up with the policy, which was £100pm for life and CI cover. I've kept up with it for peace of mind - it's not cheap, but the way I see it is, if someone could guarantee that I'd be alive at 65 for £24,000 (the cost of the policy) I'd snap their hand off. My mum died at 53, my dad at 63, and my brother at 47, so I'm really conscious that it could happen to me too. So it's a weird kind of win-win for me - either I get ill and have the funds to live on, or still be alive at 65 and "lose" £24k.

I have both life insurance and critical illness cover. we only pay 45a month. Not sure exactly what it covers, I remember something about if you got cancer but had to be stage three and survived the mortgage would be payed off and I think something about if the kids got certain illness and having to take time of work paying out 20k ect.
I don't think I'd pay it if it was as much as yours though.

We got all of our products through our independent Financial Advisor - not through a mortgage recommendation.
He is quite clear what fees he gets on products he recommends for us so it' transparent and his payment is a fee so isn't based on kickbacks.
I can't realistically get critical illness cover as due to a pre-existing medical condition (well actually the meds I take for it) means that most places won't insure me and those that will make it very very very expensive.
I do have life cover. IFA was really good at getting me this as it's a bit trickier than most but mines not extortionate even though it is more expensive for less cover than DH.
DH has critical illness and life cover but also has a fairly decent work policy re sickness
We periodically review it to make sure it's still the right cover and the costs involved aren't ridiculous.

Your personal circumstances make a massive difference to this kind of decision so you need to sit down and work out what happens if everything goes tits up.

Costs are going to vary on personal risk and also how much is being covered. Paying off a £50k mortgage is going to be different to a £500k one etc

I have it. I was a single parent when I look it out and only get 4 weeks sick pay. If I was off then I couldn't pay my mortgage.

We decided critical illness was too expensive, but we both have really good sick pay so less of a worry. Our financial advisor said that given our level of sick pay, the critical illness cover would not be worth the money it costs.

We do have life cover, death in service from work, and also insurance for our son in case one or both of us dies. In that case he'll get a pay out which will enable the surviving parent to give up full time work until he's old enough to not need childcare, or for his one of his carers (which will be his aunt and uncle) to give up work. That was really all that was important to me - the life cover will pay off the mortgage but if one of us died the one left would really struggle to earn enough to pay childcare and bills. We'll revisit it when he's older to see what's appropriate when he doesn't need paid childcare anymore.

It’s something I’ve been thinking about but like a few others we decided to just do life cover. My reason was that death was obviously final but many illnesses might not have a life-long impact on earnings. Our critical years financially have been the early ones paying for nursery when statistically we were much less likely to have something like a stroke or cancer.

But, I’d be much more likely to consider it if I was 50 plus and still paying a hefty mortgage or school fees and had a way to go until pension access. I’m sure the premiums would be pretty high at that age but may well be worth it for a few years if high expenses and higher risk of illness.

As another poster above mentioned, mortgage brokers do get money for selling you these policies.

Yes, and just in case it isn't abundantly clear, it isn't just a single kickback: you will find that a reasonable chunk of every monthly payment that you hand over will be going straight to them, quite possibly until the day the policy ends, many years later, as a reward for their single referral of you - so that's why they're so desperately eager for you to take it.

In a way, it's almost a privilege to have long-term conditions that mean no critical illness or life insurance companies will touch you with a bargepole - or if they do, they'll probably want three times your monthly income as a premium and exclude 95% of everything that you could get ill from/with or die from.

You suddenly find that those very same 'caring' companies who urged you that it was essential and that you simply must not be without it, whatever you do ("Won't you think of your children - you owe it to them, you know"), will quite cheerfully throw you under a bus if there's the slightest risk to their profits!

That’s a lot. It’s worth thinking about all eventualities as it’s so variable for different people. I thought I was covered for everything between life insurance and income protection policies - but then the reason I needed to take 6 months off work was because my daughter got cancer age 6 and we needed to travel overseas for treatment for her. I wished I’d taken out critical illness then as most policies will pay out something for a child’s critical illness too. All stuff that will hopefully never happen but worth thinking about how you’d cope with all worst case scenarios.