Life/critical illness insure - not sure I need it.

[BrassicaBabe]

I'm 50. I've just had a long term life/critical illness policy come to an end. It was £50 per month. The sum insured was based on a mortgage I had with ex DH 20 years ago!

I'm thinking I don't need life insurance. Mortgage and basic bills are covered by DH self employment. If I die my pension would be his. Plus the cash savings we have. My only quibble is that the kids will be at home (and expensive) for about another 10years.

So I looked at critical illness cover. My thoughts being if I'm still alive but unable to work I still want to "live" (expensive haircuts etc 🤣). But at the price quoted mean I'm not sure about that either.

A quick "compare the market" suggests all life/critical illness policies would be £200 ish pcm. (Never smoked)

What do folks think?

Never had CI cover myself; too pricey. OTOH I know a few people who've had heart attacks from which they've fully recovered and are now mortgage free as CI cover paid up.

If you work and have good occupational sick pay, thinking public sector type schemes, you can save a bit on sickness insurance by accepting a deferral/reduction of insured benefit to dovetail with contractual pay.

Income protection would provide you with a regular monthly payment if you become too ill to do your job. You can keep the premiums low by reducing the cover or delaying the start. It covers any illness which stops you doing your job, unlike critical illness which only covers a limited range of illnesses.

I was in a similar situation to you a few years ago and decided to swap the life insurance for an income protection policy. For the same price as my previous life insurance I was able to buy IP cover of £600 per month. Unfortunately I had to claim on it as I became ill, and the £600 per month was really useful for maintaining my quality of life while I was going through a pretty rough time.

If you an possibly afford it, but get it. If I hadn't had it, I would be living in poverty now

I've worked in life insurance and honestly, me and my husband have life, critical illness and income protection. The life insurance will pay off the mortgage if something happens to one of us, the ci will do the same and more if we claim for that and the income protection will pay if we can't work. It's a no brainer for us, but we like to have our bases covered. Especially working in the industry and you unfortunately see people who are not very well covered. We also have savings, but if something was to happen to one of us, we want the other to be as protected as possible.

Also think about seeing a financial adviser, as they may get preferential rates with certain providers

I’d be more inclined to put the £200pm into an ISA & kind of self insure.

Speak to a broker but I would definitely go for life and income protection if you have children. Don't underestimate the effects on your husbands ability to work of you becoming severely ill/disabled or dying . CI is expensive but was lifechanging for us when it paid out.

CI saved us when DWP took 6 months to process our benefits claim, and advised us to rely on food banks in the mean time

I'm a protection adviser (ie specialise in this field). I'd say you need to speak to a protection adviser who is whole of market to complete a full review and give you advice in this area. A good adviser will take in your full family circumstances and advise accordingly.

Well you can only hope that you don't ever need it.

We had it and it was used... but as a single woman now I haven't got it. If you can possibly afford it I would say get it.

If the life insurance and critical illness are too expensive I would get a quote for just life insurance. Your husbands income covers the bills but could he parent your kids alone and maintain his current earning potential without it causing misery to him or the kids?

What protection do you get through work? We have never taken it out as either mine and DHs death in service payments would clear the mortgage (and leave some extra) and both have 12 months sickness pay. Because of that, the monthly cost doesn't seem worthwhile

You're correct to think there circumstances where you don't need it, it's not a given and you have to be mindful that a lot of people are over insured, a lot of IFAs over sell, and people forget about the self insurance option.

We have no insurance at all. We're mortgage and child free so our costs are low. I have excellent sick and pension entitlement and if I died, DP would receive the death in service from my pension. We have savings. If he died or couldn't work I or we could live on my income comfortably, even if I wanted to take time off or work part-time. I've worked there for decades in a shortage profession that is very hard to recruit so they'd accommodate whatever I wanted or needed.

Your worst case scenario is probably that you have an accident tomorrow where you suffer injuries that mean you have to spend a lot of time in hospital and cannot look after DC. Financially, what impact would that have?

You'll probably be still paid for a period, and if you have to be medically retired your pension will pay out, if you die there will be a lump sum. You're mortgage free so there's no mortgage to pay off.

But if anything happened to either of you, your self employed DH probably couldn't work so income protection that covers this scenario is probably worth looking at. Maybe with a longer waiting period to reduce the cost if you have savings you can live on in the meantime.

Think about how easy it would be for your DH to work if you also needed care or how easy he'd be able to pick up work again after a life changing event. If he'd need to take time out to look after DC and struggle to restart his business that's a different scenario to if your DC are older and he'd easily be able to work again.

At 50, we took out joint Life insurance in case one of us died early in retirement, to provide a buffer against losing one person’s income. Especially in my case as I would lose both DH’s State Pension and HALF his military pension,
which he gets in 18 months at age 60.
The insurance runs to age 70 and is £30 a month for £100k.
DH also has critical illness + life cover for £100k but it ends next year.

I worked in insurance claims before going on to become the underwriting manager.

Imo, critical illness cover is invaluable. It gives you quality of life when you’ve been diagnosed with a life-changing condition.

I think PP mentioned IPB - this is extremely expensive, you’ll be harassed constantly during the period you’re off work and it doesn’t cover your own specific job. There’s no question that it’s been useful for some, but it’s complicated and far more claims are refused. Unless you think you’ll be off work with a bad back or mental health issues or the suchlike, the chances are that whatever stops you working would be covered by critical illness which is far easier to claim.

Is it not a condition of your mortgage? Usually anyone whose income was taken into account in offering the mortgage will need insurance.

It is not a legal requirement.

No its not a requirement.

It's probably a strong recommendation if you rely on your income not dropping to pay the mortgage but this doesn't apply to everyone, especially later in the mortgage term.

Plus many pensions include death in service benefit that would provide a lump sum if you died.

Or if you have no dependents no-one would lose their home if you died.

Or people have savings and sickness benefits that would cover the mortgage if they couldn't work.

The point being don't jump straight to buying this hugely expensive insurance policy that someone is trying to sell you without first thinking about what other income/payouts you'd be receiving.

i looked into this recently and it seems to end at 90 so if you live longer you can't claim and if you want to keep paying the premiums are more expensive

Most Death in service payouts wouldn’t cover a whole mortgage for someone under say 40. They are usually 3x salary, DD is a Teacher earning £50k, her payout wouldn’t pay off their house, they still owe £230k. Top up insurance, to pay off the entire mortgage and have £100k spare, especially if you have young kids, is essential.

Why would you risk losing your home if you or your partner died?