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Original poster

Is life and critical illness cover worth it?

29 replies

Crossfitgirl · 22/09/2018 21:06

My DH and I are moving to a bigger house with a bigger mortgage, neither of us would be able to afford it without the other, so we have been given some quotes on life insurance, critical illness and income protection cover.

I wondered what other people's thoughts and experiences are with it? Is it worth it? Does it give you peace of mind? Have you claimed on it?

Neither of us would be able to afford the mortgage on our own, so I think the life insurance is worth it to pay off the mortgage in any unfortunate event, but the critical illness cover is expensive (about £55 between us, on top of life and income protection).

Its basically a lump sum if you get an illness, disability etc or can't work. It would mean if one of us couldn't work for whatever reason, we wouldn't need to worry about selling the house... But it's veeery expensive!

Interested to hear what other people do?

OP posts:
HollyBollyBooBoo · 22/09/2018 21:18

Wouldn't be without it, thankfully never claimed on it. Good to know that DD and I wouldn't be homeless and destitute if I got ill. That has to be worth £47 a month!

MadameJosephine · 22/09/2018 21:26

I wouldn’t be without it either, particularly as a single parent. In the last few years I’ve had 2 friends who have had to take over a year off work sick for cancer treatment. Neither of them had critical illness insurance and struggled financially at a time when they should have been worrying about nothing else but getting better

Original poster
Crossfitgirl · 22/09/2018 21:39

Thank you, that's good to know.
We are looking at about £93 a month in total for both of us which includes life and critical illness for both of us, and income protection for my DH (I work in NHS so don't need the income protection).

It just seemed like a hell of a lot of money so I wanted to scrap the critical illness cover and just keep the nessecary life cover and income protection, for worst case scenario.

It's hard to weigh it up as the chances of it happening are so slim, so it's unlikely we'd need to claim, but then I also think it would be a huge relief in times of horror if anything was to happen.

DH says it's win win, as if we pay it and get ill, we're covered, and if we pay it but don't have to claim, then that's a good thing!

It's just a lot of money and I hate the idea of paying money out with potentially no gain. But you just don't know what could happen.

OP posts:
kizkiz · 22/09/2018 22:07

My next door neighbor recently found out he only had months to live at 44! His critical illness cover paid off the mortgage thankfully, as his wife only works part time and they have 16yo daughter. No idea how they would have coped without his wages.

MrsPussinBoots · 22/09/2018 22:15

It's definitely a good idea if you can afford it, but always go for level cover. That way it pays off a mortgage which is decreasing but leaves some spare money for home adaptations like wheelchair ramps, holidays and unexpected costs.

iamablockhead · 22/09/2018 22:18

Just out of curiosity and as an aside, why would you not need income protection as an NHS employee OP?

StylishMummy · 22/09/2018 22:31

@Crossfitgirl have you done your own quotes rather than going by the adviser? I used to be a mortgage adviser and our quotes were often vastly more expensive than going directly

PigletJohn · 22/09/2018 22:51

If you have dependents and a mortgage, you both ought to get life assurance. A single premium policy on the declining balance of a repayment mortgage is good value.

I didn't go for critical illness, on the grounds that if I was covered for 40 diseases, I'd be sure to get the 41st.

But I took out PHI when I went into business on my own. I chose one with the criterion "unable to do own job" because there are some that say "unable to do any job, so if, for example, you lose your voice and are no longer able to carry on as a barrister or auctioneer, you're still fit to work as a mime artist or a shelf-stacker.

The premium is lower as the wait time goes up, because, I suppose, most people are likely to be better (or die?) after 6 months so won't need to (be able to) claim. So I took out one with a 3-month wait and one with a six-month wait.

I had the misfortune to be injured and off work for about a year. I never actually thought it would happen. Outstanding receivables and savings took me through the first wait period. Had I not recovered, I would have been on benefit until (IIRC) normal retirement age, and the premiums waived. I went for about half-pay cover in total.

It is quite a costly policy. IFAs will offer it but there are policies available direct that may be better value. I am not in touch with the market now, I think I read a survey in an IFAs trade mag called "Money Management" or similar. There are probably comparison websites now.

If you can't afford to be off work for long, you may find medical insurance shortens the queue for treatment. The cost increases with your age.

Amaaboutthis · 22/09/2018 22:57

Yes yes yes and yes. My 45 year old husband was diagnosed with cancer last year. Critical illness has paid us out to the tune of £200k. Although his work has an excellent benefits package and he will never go below 70% of his salary it means we really have no financial concern. Unfortunately you never know when you need it but when you have to deal with a serious illness it makes all the difference to know that one worry you don’t have is money

AlexanderHamilton · 22/09/2018 23:00

Dh has cover and we are probably going to be claiming on it soon. He’s on half pay at the moment which runs out early December. He’s been off work since the beginning of June with no end in sight.

AlexanderHamilton · 22/09/2018 23:04

I think it’s income protection dh has. He took it out when he was self employed. He is now employed but who wants a music teacher with distorted hearing who has frequent dizzy spells. He should get 60% of his income.

researchandbiscuitfan · 22/09/2018 23:14

Yes. It’s worth it. My DH died at 37. Never in a million years thought it would happen to us.

The life insurance paid the house off which means I can afford to work part time and pick the kids up from school every day

SwedishEdith · 22/09/2018 23:25

Life insurance definitely. CI, I'm in 2 minds about. I took mine out 25 years ago for first house. After 20 years, I started to get letters saying I needed to increase the premium or the reduce the pay out. From looking online, the premium can increase to quite significant levels. My payout level was only ever enough to pay off first mortgage so not a huge amount.

Original poster
Crossfitgirl · 22/09/2018 23:30

There is just the 2 of us at the moment but we plan to start a family.
The NHS gives full sick pay for I think up to a year so I don't need income protection, as if I'm unable to work for more than a certain time it'd come under part of the critical illness cover anyway.

Thanks for the advice on direct quotes, I will have a look at going direct and comparison websites. I'm just wary of the small print and would rather pay more for a decent policy than less for something with lots of hidden exclusions.
Good to know advisors can bring a premium. Is that due to commission?

Thank you, i hadnt thought of medical insurance in that perspective.
please can you tell me what IIRC, PHI and FSA stand for? Sorry if I'm missing the obvious!

I am sorry to hear about these unfortunate events but it is good to know that these policies have value in real life and can really make a difference x

OP posts:
Lougle · 22/09/2018 23:47

The NHS gives 6 months full pay and 6 months half pay. Which when you're fit and healthy sounds positively luxurious. But it will rattle by if you're not, and there are many illnesses that are bad enough to stop you working but not bad enough to come under critical illness cover, so I wouldn't rely on being NHS to exclude yourself from income protection, tbh.

Happytot · 22/09/2018 23:59

Some level of CI is important. Rule of thumb is you should insure 2 years net salary because if you are diagnosed with a critical illness you are likely to be back to work after 2 years. The biggest advantage of CI is that for eg you are diagnosed with an illness and hospital treatment is required with a lump sum payout it allows your spouse/partner to take unpaid leave from their job so they can support you and/or your children. If you are shopping around please remember cheapest is not always the best you need to look at an insurance companies claim stats. Also the majority of life insurance policies have a terminal illness benefit whereby if you have less than 12 months life expectancy 80% of your insured amount is paid out before you die and the balanced paid after. But each company is different so double check with your provider.

Hushabyelullaby · 23/09/2018 01:54

My husband has life and critical illness insurance, I used to have - until I was diagnosed with MS at 31 and needed to claim. You simply don't know what's around the corner. I used to work with a financial advisor, and the amount of times I saw people who'd come in in dire straits because they didn't have CI as they 'didn't think anything would happen to me'. When we got a mortgage I was adamant we'd have insurance to cover things like this because of everything I'd seen. Thank goodness we did!

CallMeRachel · 23/09/2018 03:03

Can anyone recommend one which is easy to apply for?

I was declined Life insurance a few years ago after a million intrusive medical questions and the thought of going through all that again puts me off

endofthelinefinally · 23/09/2018 05:01

Read the small print carefully.
I paid for 30 years.
Then when I was diagnosed and had to stop work they told me my illness wasnt on their list.

PigletJohn · 23/09/2018 08:47

That's why I went for PHI.

Spickle · 23/09/2018 09:58

The various insurance policies and critical illness policies are expensive and we had to think twice about paying for them when we were late twenties, just starting out and in the best of health.

Over the years we continued to pay (only increased the cover a couple of times) but it wasn't until my DH was 46 that we really appreciated the reason why these policies are necessary.

DH was diagnosed with cancer and couldn't work for about 18 months. He did get full pay and then half pay for a year but after that it would have been very difficult financially plus we had two expensive teenagers by then. I hadn't worked full time for over 20 years and had just had little part time jobs to fit in with the children. The chances of me finding decent work with decent pay was remote, let alone having to care for an extremely ill partner. The insurance paid our mortgage off and the critical illness payout enabled us to continue our lives financially without too many changes. My DH died three years after his diagnosis so our life now is very different, but I am very grateful that the policies meant my DH's last year was not fraught with financial worries.

Original poster
Crossfitgirl · 24/09/2018 23:12

Thank you so much. I will definitely be investing in it and dont feel so bad about it being a little expensive now. @pigletjohn what is PHI?

OP posts:
PigletJohn · 24/09/2018 23:30

Permanent Health Insurance. I don't know if that's the same as what's called Income Protection. It pays out every month while you are unable to work due to illness or injury (after a waiting period), as if you were getting sick pay. Mine didn't have a list of conditions they cover, just "unable to do own job." If/when you get better it stops paying but the policy continues in case you should be ill again. You pay monthly premiums continually except when you are receiving benefit. I don't have it any more.

namechangedtoday15 · 25/09/2018 00:21

Just to reiterate - get it. You don't necessarily need the same level of cover (ie you could have life insurance to pay off your mortgage - £200k, and critical illness for Say £50k - enough to tide you over). Long story short, my H (boyfriend at the time) was diagnosed with cancer at 23. When we bought our first house together a couple of years later, we took out critical illness cover but cancer was excluded so when it came back, and he couldn't work for 4 months whilst he had chemo, he got statutory sick pay which was about £65 a week. I was 7 months into maternity leave - due to go back in a few months. I was on statutory maternity pay. We stopped from 2 good professional salaries to about £150 per week. You have no idea how quickly you burn through savings like that when you have all your ordinary bills to pay out and it's just such a financial headache. I would make sure you have some sort of protection.

planetclom · 25/09/2018 01:13

Snap their bloody hands off! Me and my husband where recently quoted 530 a month! A month! We are mid 40's early 50's only my husband has a preexisting condition which is treated and under control so therefore makes him less
Of a risk than me, we didn't take it out as at the rate our mortgage means we would have paid a 1/4 of our mortgage in the remaining time of our mortgage if we paid this. So for much of the mortgage it would be counterproductive to pay.
We have started an account and are laying it in as our own self insurance.