Should we take out income protection?

[Olivea17]

We are in the process of buying a house and our mortgage broker is now at the stage of trying to sell us life, critical illness and income protection. My husband has life insurance through work so we’ve taken out a policy for me. Critical illness cover is £60 per month and income protection £22. Is it wise to take out the income protection or should we stick with life? My husband gets 6 months full pay and 6 months half with his current employer. I am not working at the moment so I am mindful that If he wasn’t able to work, we may be in trouble as all of our savings are going to go into renovating the new house.

I think income protection is important especially if you are going to be relying on one income. I have worked with cancer patients and it's really brought home to me how badly a long term illness can put people into poverty very quickly.

Even if you are working, if you needed to stop work to care for your husband then you would suddenly be having to live on benefit income only. This scenario is not made up, I have seen this happen to many people.

There is only help with mortgage payments if you have qualified for a means tested benefit for 9 months. Then there is only help towards the interest and it is a loan via a charge placed on your property. If you don't quality for means tested benefits there is no help for mortgage pyts. And the amount you receive towards living costs has largely been frozen for a number of years so is below subsistence level.

For £22 pcm I would get the income protection. Do check the conditions on which they pay out though - some of them pay out if the insured cannot do ANY work but it is better to get one that pays out if they cannot do their current job.

Personally I wouldn't bother with critical illness as it's expensive and only pays out if you get very specific illnesses. You could get an illness or listed that makes you very ill and they won't pay. Income protection covers what you need without being too costly - protection so you can afford your mortgage pyt and living costs if the worst happened and the insured was unable to work for a long period.

Yes , definitely get income protection & if it means the critical illness cover is unaffordable then reduce the ci cover down as that is necessary too.

Also, even though your DH is covered with life assurance with his employer he should have life cover on the mortgage as well. No job is guaranteed & you never know when he may have to change jobs. Death in service benefit should be seen as a luxury & you both should be covered equally.

Thank you both very much, we did have the conversation last night and said we would get the income protection. A friend of mine gets it through her bank but they don’t seem to do it anymore. Hadthesnip2 what would the difference be on having life assurance through work and getting another cover? Isn’t that paying twice for the same thing? He gets 4x his salary, which would pay off the mortgage. We thought if he changed jobs and didn’t get the same benefit, we could then buy it? However it is very likely that if he applied for a different job, life insurance would again be part of his package. Also if we reduce the CI cover down, doesn’t that mean it will cover less. I just thought £80 per month is a lot to pay each month (obviously you wouldn’t think that if a scenario like the one above happened). We will be overpaying our mortgage by maybe £300 a month so wondered if that was a better option as we would then have that money to turn to should the worst happen. Am I being stupid?

You should both have life assurance.

However, a mortgage protection policy (we'll assume it is a Repayment mortgage) should be very cheap because it is to cover a reducing balance. It is not an investment policy. And it is only for (say) 25 years. You will probably not die in that period. If it was to cover your whole life, then you would be certain to die, sooner or later.

It is convenientto take it out as a Single Premium policy, taken out and paid at the time you exchange contracts on your house. Unlike any other policy, it will not be cancelled if you change jobs, it will not go up or have cover reduced if you become ill, and you will not have to keep paying premiums, uninterrupted, every month or every year even if you fall on hard times.

Life and sickness or disability cover attached to your job is a useful benefit. Until you change jobs or become unemployed.

We didn't do critical illness because we didn't think it was worth it but we do have income protection which I definitely think is worth it.

If you are terminally ill, the house will be paid off with the life insurance usually but you'll still have all the usual bills etc to pay.

BTW if either of you became severely ill or disables, the other would probably have to give up or cut down on work, and household duties would still need to be performed, especially if you have a family.

I prefer income protection/PHI to critical illness cover, because my thinking is that if I was covered forr 99 diseases, I'd get the 100'th.

I took it out in case I got, say, MS or something. In fact I was badly injured in an accident, and was quite pleased I had it. I had two policies, with different "waiting times" before payments started (this makes it cheaper, because if you get better in a few months, you can live off your savings and the insurance co doesn't have to pay out). The first one was enough to pay the mortgage, and the second one was enough to live in tolerable, but reduced, circumstances until I got better (which I mostly did) but if not they would have paid until I reached retirement age.

We’ve taken out life cover for me. My husband has life cover through work. If he changed jobs we would then get a lifeboat cover policy for him at that stage. Are you saying we should just get his policy now?

*life cover 🙈

A Mortgage Protection Policy, yes, for both of you.

Let's suppose he develops Galloping Lurgy before leaving his current job. You won't be able to insure then, or it may cost more. Take it out while you're relatively young and healthy.

So we need life insurance, income protection and mortgage protection too?

If you get ill and are unable to work, would you be covered by the income protection policy? Could someone please explain why you need both income protection and critical illness?

You mentioned if you get ill whilst at work and changed jobs, you wouldn’t be covered with the next insurer for that illness. Is that why you suggest getting a policy now? Would that mean staying with that policy for it so entirety and then everything would be covered and premiums wouldn’t increase? We are 29/33 so we have been given v cheap quotes, I think to add my husband to my policy would cost about 7 quid.

there are various policies. If you pay monthly they often have index-linked or escalating cover, and the premiums also rise.

Some have a fixed amount and a fixed premium.

A mortgage protection policy, I think you want term assurance with a fixed or single premium, because you don't want it tp lapse because you miss, or can't afford, to pay.

Once you have an ailment, you can't get insurance against it, so best to get cover while you are fairly fit. Ailments tend to occur and worsen as you age.