Life/income/critical illness insurance

[christmaspudding43]

Hi,

After some opinions on the above insurances if anyone has any knowledge or recommendations. For a number of reasons it's on my mind but the few bits of digging I've just done return astronomical premiums or income protection for only 12 months which didn't seem worth it for the cost.

OH and I are both 40, unmarried, no kids and no plans for them. Mortgage of approx £230k which is probably around 50% LTV, house value might even be a little higher.

I have a defined benefit pension with an NRA of 62, can take it at 55 with early retirement factors. I pay some AVCs too. I have 4 x death in service on a salary that will be 71k by the end of this year. I have 6 months full and 6 months half sick pay.

He has a rubbish pension and an NRA of state pension age (well aware that this will increase). I'm not sure on death in service for him. He earns 50k. He has minimal sick pay.

I'm aware this is long. I guess I'm wondering if anyone has opinions on how much cover I should look at, level or decreasing, what premiums others pay etc. Basically any feedback v welcome!

I wouldn't bother with critical illness cover for yourself as the 6 months full pay 6 months half pay option is likely to provide enough cover. If I understand your op, your death in service payout is likely to be c £280k which would enough to pay off the mortgage for your OH. Is he named as a beneficiary on your pension?

I do think it is worth your OH looking at some insurance for himself as his pension and sickness benefits are much poorer than yours. Would it be cheaper if he is just looking to insure himself? What is his general health like?

You can’t insure against everything. I looked into critical illness income cover but the premiums were so high that it wasn’t worth it.
Do you have life insurance? I would definitely get that (unless you have pre existing conditions that makes it prohibitively expensive).
Also make sure you both have up to date wills in place.

Thanks both. No life insurance or wills. I know, the wills are on the list with high priority. OH is named as a beneficiary on my DB pension and also on one I hold overseas.

OH is fit and healthy, slim, non smoker. Both his parents have experienced heart issues. Neither of us have any pre existing conditions.

I agree we probably need different insurances (either amounts or types?). My concern on my part is that I can reasonably easily envisage a scenario where I am not fit to do my job but I am fit to do a job. The transferable skills in my role are minimal so the drop in income could be substantial. It's not a given by any means of course but it's playing on my mind.

Life - you have it, you are not sure about your OH so check as he may already have it. Might be a non issue.

Critical illness - personal choice ... I have a small amount of this because I have two small children and either me or my OH would struggle financially and physically if one of us was too poorly to help so the money would be needed. You have to think - if one of you got cancer and was floored for a year by chemotherapy is that something you need to insure against or not?

Income protection - this is always very expensive. However, again you have to say if you lost your job what would happen? Could you easily get another? Are you prepared with the risk of having to sell and downsize your house if you couldn't? As always with any insurance you have to say "am i prepared to run the risk, or am i prepared to pay the cost of insurance"? It has to be one or the other.

Id recommend talking to a broker who will take the time to talk you through your circumstances and priorities and find the right level of cover for you and your budget.

Also as others have said while you are in the getting organised mindset Wills and POA also imprtant to organise

I was coming on to say just this. I've used Caspian Insurance several times, years apart and find them good/easy to deal with. I had an issue with Trust Forms more recently and they went over and above to help me fill them out properly.

(They don't charge you for their services. I assume they claim some sort of commission from the insurers)

Caspian Insurance link

I took out Income Protection insurance. I brought the cost of it down by setting the deferred period at 12 months (like you I had generous sick pay for the first year) and taking out cover of only £600 a month.

Unfortunately I became long-term sick so had to claim on it. It’s been brilliant. My sick pay was fine for the first year, then after that I was entitled to contribution based benefits but that was only £85 per week. The extra £600 from IP made a huge difference.

I’ve since been able to take ill health retirement so I no longer qualify for benefits and the IP has been reduced to take account of my pension. But the IP provides a regular extra sum each month which helps to bridge the gap between my workplace pension and the salary I would have been getting. That should continue until I reach state retirement age.