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Original poster

Critical illness £130 a month- do we need?

52 replies

minimini358 · 16/05/2022 10:52

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!

OP posts:
DontKeepTheFaith · 16/05/2022 20:03

We had critical illness and life insurance but this was many years ago and our critical illness policy was approx £25 a month. We paid in for about 5 years before I got diagnosed with cervical cancer and it paid out nearly £85 000. It paid for a large single floor extension, new kitchen and downstairs loo amongst other things.

If we hadn’t had it, we would have got by as I had good employment sickness benefit but it did make a difficult time easier. Not sure I would do it for £100 plus a month though, it’s a lot of money and not really that common to develop a critical illness these policies pay for in your younger years.

MrsMigginsCat · 16/05/2022 20:18

£130 does sound a lot. I pay that for DH who is 58 and the cover is roughly £80k. I did have a policy but mine paid out nearly £90k in 2020 on diagnosis of endometrial cancer at 48. I think my policy was about £60 a month at the time. If you can afford it, I'd definitely recommend it. DH's policy is getting near to bring unaffordable now but I'm reluctant to stop it after my own situation.

beechhues · 16/05/2022 20:39

They've gone up, I have £140k cover on critical illness for £60 pm from a policy taken out 6 years ago but when I shopped around today, the deals were much worse.

Fedupofballs · 17/05/2022 05:51

About 10 years ago we took out a reducing balance policy at it was quite a bit cheaper, but still gave us sufficient cover. This policy recognises that your outstanding mortgage balance reduces over time and therefore the payout decreases too.

Roselilly36 · 17/05/2022 06:06

That seems massively expensive. Get some independent quotes. Personally, I think CI Insurance is essential. Very pleased I took a policy out, unfortunately I needed to claim, you never know what is around the corner.

Keladrythesaviour · 17/05/2022 06:13

I'd shop around. We have LI and CIC and combined pay about £55-60 each from legal and general, so a good supplier. Mortgage is around £270k
We wanted it because if one of us should get something like cancer (not unsual these days!) we would want to be able to clear the mortgage and give up work potentially, or have hours massively reduced. We wouldn't want to waste precious time together doing the daily 9-5 grind or worse, worrying about money and paying bills at the same time as trying to do treatment.

PermanentTemporary · 17/05/2022 06:25

I think that's too much and they always have huge numbers of exclusions - read the small print. And ask around - not many people have it. Save £30 a month in an ISA instead.

I did in the end take out income protection insurance. For my own personal circumstances I felt it would work better. I'm pretty healthy at the moment but was afraid that even a small fall off my bike/head injury could mean I could be essentially ok but no longer able to do my very verbally demanding job. That costs me £50 a month and would cover me in a bigger range of events than a critical illness policy would. And I'm the breadwinner and at the time had a disabled husband. It's still a bit of a con tbh, it's very unlikely I will ever need it but it reassured me and I needed that.

Be very careful with Vitality. My financial adviser pointed out that I had to stay within a certain weight range or they'd refuse to pay out. My weight has been a struggle all my life so I wasn't going there!

Justkeeppedaling · 17/05/2022 06:46

A colleague of mine was diagnosed with MS in her thirties. Her critical illness cover paid off her mortgage.

PermanentTemporary · 17/05/2022 07:09

It's pretty hard to find out by googling what percentage of critical illness policies ever get claimed on. It's easy to find percentages of claims paid, which are unsurprisingly pretty high, but what percentage of policies ever get used? Maybe your adviser could answer that question.

I think if you will struggle this much to cover the payments, don't do it.

ThisGirlCantAlways · 17/05/2022 07:23

We took out reducing cover around 23 years ago for £24.17/month. Enough to cover paying off the mortgage. Important one for us as a big family history of ms, luckily never needed to claim.

sunflowerdaisyrose · 17/05/2022 08:51

I claimed on mine and was very thankful for it, but it was for £30k, not £100k and in a decreasing term, was £15 a month for both of us. I've taken one out for my husband (I'm currently illegible but am better now) and that was £20 a month with virgin for £50k on a decreasing term.

My life insurance is still in place thankfully, as we had a second policy for that.

I'd take one out but for less cover and shop around definitely.

MrsWooster · 17/05/2022 09:10

Invaluable -hopefully it’ll be a total waste of money but in the event of a diagnosis of cancer etc, it’s vital.
That premium seems like a hell of a lot of money though. I had a policy from age 41 for £50k which was about £30 a month , rising about 10% throughout the 14 year life of the policy (I claimed on the policy this year).
Shop around.

ByTheSea · 17/05/2022 09:16

Well, this is a bit topical but I am so thankful I opted for critical care cover through work as I'm about to claim it having just been diagnosed with incurable cancer. It is enough to clear the mortgage (although our rate is low so will probably invest in something with a higher yield and drip feed the mortgage payment. I only get 3 months full salary so it will be quite useful.

WeBuiltThisBuffetOnSausageRoll · 17/05/2022 10:25

It's pretty hard to find out by googling what percentage of critical illness policies ever get claimed on. It's easy to find percentages of claims paid, which are unsurprisingly pretty high, but what percentage of policies ever get used? Maybe your adviser could answer that question.

Slightly swerving, but I always wonder when that LI company that advertises incessantly on TV (and yet whose name I still can't remember) proudly proclaims that they pay out on 100% of claims. How can they be so certain? If I had a policy with them and then called them, being perfectly healthy, saying "I wish to claim a payout on my LI policy with you as I have sadly recently died - please send a cheque made payable to me" - surely not?!?!

AndSoFinally · 17/05/2022 10:40

I would get life insurance, but then get income protection rather than critical illness cover.

CI only covers quite a small range of things and seems to be easy for insurance companies to refuse to pay out on. If you've got a years sickness pay from work then IP will be relatively cheap as you'd have to be ill a whole year before you'd need to claim.

MrOllivander · 17/05/2022 10:43

I don't have any Blush not able to get it. I was diagnosed with a condition before I ever had a mortgage that it turns out is classed as a critical illness: helpful!

Llioed · 17/05/2022 11:27

I haven’t read the full thread but I took out life assurance (with critical illness cover) with my DH 8 years ago when we got our mortgage, and as it happens I was diagnosed with cancer last year. I got a payout from my insurance company which we have paid off our mortgage with now.
I know it’s a lot of money but I strongly recommend it.
Life insurance is paid out on the death of one or both, which is horrible to think about. But critical illness cover is paid out if you become poorly and your condition is covered within the policy.
I can’t stress how important it is to protect yourself and your home for your child.

Llioed · 17/05/2022 11:36

PS - it’s not really about how good your company’s sick pay… what if you become poorly and can’t return to work? What if you can’t do the hours that you do now (for example you are FT now but can only return on PT hours?)
I was working 30-32 hours per week but now only do 20 because of my condition & symptoms, I can no longer work 4 days per week. I am now looking at doing 16 hours per week very soon. Having no mortgage has certainly made it a lot easier and it’s a massive weight off my shoulders financially.

A PP suggested putting £130 into an emergency fund - this is a bit pointless because you don’t get all the extra money to the value of your house.
My DH and I paid £60 per month and we got a payout of over £112,000. It’s a no brainer really.
I would pay £130 per month, now I know what I’ve been through.

WeBuiltThisBuffetOnSausageRoll · 17/05/2022 11:39

I don't have any Blush not able to get it. I was diagnosed with a condition before I ever had a mortgage that it turns out is classed as a critical illness: helpful!

But it's essential, don't you know!!

I'm in the exact same boat as you - it looks like our lives are officially not worth anything.... how lovely.

rookiemere · 17/05/2022 12:01

@Llioed I'm so sorry you have had this happen to you.

However vast majority of people never claim on critical illness, therefore it's a gamble to spend £1.5k annually for something you may well never use as opposed to putting it in the bank where it's most definitely worth £1.5k per annum.

I suppose it's about balance at the end of the day.When we got rookiedog DH was keen not to get pet insurance and put some money in an account, I said that was fine if he was prepared to make hard decisions if ddog needed an op costing £10k don't worry I didn't really mean it-. So we've compromised and gone for the basic level of pet insurance which gives us cover for most things but is half the price of the Gold level cover.

stillherenow · 17/05/2022 18:14

I had critical illness for an old endowment and unfortunately had to have the pay out . I'd stopped paying into it years ago so I'm not sure if you have to keep it going or not- maybe mine was because it was linked to an endowment ? Anyway, it paid out £25000 and I did up my house 😁

stillherenow · 17/05/2022 18:16

Mine was also for cancer (I'm fine now ). Had I been on my own it would have been essential .

HerbalRefreshment · 17/05/2022 18:46

I see some familiar names here from the cancer thread.

I had CC cover through work and aaaallmmooosst got rid of it 9 months before I was diagnosed. I figured I was youngish (41 at the time) had life insurance coverage, and really good sick leave and partner on a good wage so did I really need to be paying (whatever it was) per month? In the end I compromised and reduced the cover to the minimum. The £55K payout wasn't much, but it gives me flexibility and care options for a now much-shortened future.

Just like life insurance you think you don't need it because "Im too young" or "it happens to other people" or "I dont have cancer in my family" etc. It doesn't even have to be cancer - things like MS or other illness are just as devastating. Statistically it has to happen to someone - it really could be you.

That being said, the £130 a month seems like a lot (mine, even for the £100K level I was at, was never that much) - would definitely shop around and read fine print!

AnneElliott · 17/05/2022 20:13

That's really high. Are they taking into account the 12 months sick pay you say you get? Mine is approx £40 per month and I think I got it in my 30s. But it doesn't kick in until after the first 6 months as my employer would pay full pay for the first 6 months.

SwedishEdith · 17/05/2022 20:28

If you do take it out, check if the premiums will start to rise after x years. Mine was (still is) £15 pm but after about 20 years, I started to get letters telling me that for same level of cover, it'd have to go up pretty significantly. And googling showed it could increase to the levels you've been quoted. I've just kept to the cheap premiums and the reducing payout instead.