tarmac terror

iTrader: (2)

My wife has a critical illness insurance policy which I pay for, as I provide the sole income for our family presently - she will return to employment when the kids are a little older. Every year this policy now seems to be increasing by about 10 per month per year. It started out at £45 per month, it is not £83 per month, and the amount of cover is decreasing. She is in good health and always has been.

My wife doesn't want to cancel it, based on the fear that she may at some point need to call upon it.

Does anyone else pay for this type of cover? can I ask how old you are and what the premium is? PM if you'd rather. Any IFA's on here who are in a position to offer insight?

john banks

No, I thought I was poor value with too many fees being skimmed off to the adviser and many situations where it wouldn't pay out. I have income protection with a mutual instead. When my wife wasn't working though, her income protection would not have paid out at anything like the cover she was previously paying for though, but we didn't think critical illness cover was a suitable replacement because of the factors above. Some swear by it as it has covered their costs for a claim, but say £50k as a lump sum is nothing compared to 20-30 years of not being able to work...

AndyBaker

I appreciate that a lump sum wouldn't last the rest of your working life but for me (and I have some) it would make the time I had left livable, (and maybe bearable) whereas £1,000 a month probably wouldn't.

mamoon2

You took out the wrong type of policy.

Mine is for x amount of cover for a fixed price per month. Neither can change.

£83 a month is a heck of a lot. I pay £35 a month for £1m cover

urban

iTrader: (1)

My wife has income protection and illness cover.
She unfortunately took seriously ill approx 10 years ago and was hospitalised for about 15 months.
Critical illness wangled out of paying up, but income protection did.

markjmd

iTrader: (11)

With the size of these premiums, and particularly the fact the amount they would pay out is slowly decreasing, I would expect them to have been calculated on the basis they'll cover a fairly sizable mortgage plus your wife's and the children's living expenses for the duration of any illness. Now, all of that would make perfect sense if she was the sole breadwinner and the family would be destitute if anything were to happen to her, but clearly this isn't the situation. It's you paying the bills for the next few years, and assuming you're paying off a mortgage (which I'm guessing is likely, if you're still at the stage of having younger-age kids) it's a given you'll have life-insurance which would cover full cost of the house plus living expenses for wife and kids until they've grown up, if the worst happened. My take on it then, the bulk of that £83 a month would be far better spent making mortgage over-payments, simply because you'll not get near as good a return from investing the same amount in any other kind of savings. If you don't have a mortgage (and perhaps as a result also no life-insurance), as JB already pointed out, there are probably other more suitable nest-eggs the Mrs could be paying this into, than a type of policy which at the end of the day is mostly geared towards fully-employed persons with mortgages to pay off.

hail-hail

I have an Income Protection policy as well as Critical Illness.

The Critical illness pays out a lump sum over 1m and pays off mortgage etc

Income Protection give me approx 60k per anum if I am not capable of work for a period of 3months or longer.

Cant remember the costs bit it is not cheap, but I earn well now as a contractor, so the relative cost is minimal.

EddScott

You need to find out exactly what you are paying for before you decide to bin the policy.

Find the original policy document or any correspondence from the provider and ask them exactly what type of policy it is and why the premiums are increasing and why the sum assured is decreasing.

Once you know what type of policy it is then its time to decide if its worth keeping. If you do want cover but just not this one, find out what you can get first before cancelling the current one. If you decide you don't need any life assurance just cancel the direct debit. The policy will lapse in a few months (usually)

Whether critical illness is worthwhile or a con as some would like to suggest is up to you. My wife developed cancer a year ago, her policy paid out, it enabled us to move to a bigger house that could accommodate her needs. This wouldn't have been possible had we not had the policy.

chet123

iTrader: (7)

As suggested i would look at locating the policy document/schedule.
My critical illness cover for myself and my wife is something like £35 each p/m. This covers 200k of any major illness as stated including death.

However mines is apparently a decreasing policy as far as i can remember, meaning each year the monthly payments should reduce because as you get older because you have less years to live. Something like that. Did you take insurance out through a broker or yourself. I used a recommended broker who if I have an query will approach and work on my behalf because it were them who set the policy up based on the information I we provided face to face.

The other is life insurance which is based on death meaning the remaining term of your mortgage will be paid off on death of either parties.

EddScott

Decreasing usually means the sum assured is decreasing - usually in line with a debt that needs repaying should you die before the debt is paid (a mortgage for instance)

You can get life cover through a broker or online. I have found though that the online prices aren't cheaper and usually more expensive then using a broker.

AndyBaker

With that argument I assume that you insure your car third party only and save the difference between that and full comp in an account to use if you have an accident that's your fault

john banks

The flip side is that you could insure every risk possible no matter what the cost:benefit ratio. When I look at critical illness policies, as a doctor, I think it is reasonably likely you could get an illness that you find critical but your policy doesn't.

Lydia72

Not quite the same but I know a lot of people don't bother with pet insurance, instead choosing to put some money away each month in an account. Hopefully they don't end up with a vet's bill but if they do they have some savings towards it.
We took a chance with our cat, she lived to 18 with nothing wrong other than usual yearly jabs, pet insurance would have been a waste of money for us.

AndyBaker

I have personally walked 4 clients through claims whereby in two cases (breast cancer) their mortgage is now paid off and the other two (cancer again) are no longer with us but had the knowledge that they weren't leaving their wives / partners in the **** and it gave them a lot of comfort, one of them being a close mate

I can understand why people will not do this because of the bad press but trust me when you have seen what benefit people have had, you might just look at it differently.

john banks

The two fatal cancers would have been covered by life insurance which apart from non disclosure has a relatively indisputable end point? Are the majority of properties mortgaged to the hilt that they should depend on a diagnosis from a specified list rather than the patient's function? Why would I trust a salesman's anecdotes or injunction to trust them or the industry's self congratulatory advertising claiming high pay out rates for critical illness policies? The breast cancer cases getting their mortgage paid is good for them, but does it produce a good ROI for the population to take critical illness insurance when it might not cover DCIS for example which can have more impact on an unlucky patient than a lucky patient with stage I who makes a complete recovery, is back to work in a few months and never has a recurrence?


"You might look at it differently" - you bet I do.

Insurance is there to make the salesmen and underwriters a profit, it is not charity. Despite having policies numbering in the teens, I have had salesmen trying to tell me I am underinsured because I don't have critical illness, and want a few grand in fees for putting my name on a PDF that is supposed to be an assessment of my circumstances but is plainly ill thought out claptrap to try to cover their *** for the regulator.

cster

I have critical illness cover, and I'll bet if push comes to shove, it is pretty useless.
Still - until the little-uns have flown the coop.

urban

iTrader: (1)

This is 100% true, AVM being one such condition.

AndyBaker

All I can say John is that there is a very big difference between a salesman and a financial adviser. For your information there are policies out there that cover DCIS so you have clearly been seeing the wrong people. I just hope that no one reads your comments and decides not to protect themselves and their family.

P.S. I'm not trying to sell anybody anything just responding to the OP

john banks

Does a financial adviser sell financial products? Does me asking questions about the value of a product undermine scary sales tactics? Does you pointing out what you think is news that some critical illness products cover DCIS have any more relevance than me pointing out that some cars have four wheels when yours has three?

Until proven otherwise, OP has been stitched up by a salesman.

cster

So there!

markjmd

iTrader: (11)

Before I answer that, perhaps you'd like to comment on why you think it is the amount of coverage from the OP's other-half's policy is steadily decreasing, if it's not down to the fact that said coverage is to a lesser or greater degree calculated on the basis of the value of mortgage that's still outstanding?

EddScott

No.

A bit Daily Mail but yes, probably.

Most people would have to google what DCIS was. Most people know a car has 4 wheels.

Quite possibly. OP needs to find out exactly what the policy is before making a decision.

Wouldn't normally respond to the bait but have a spare few minutes.



Its a guess but I would assume the policy is a decreasing term policy - the sum assured reduces each year as some debt, usually a mortgage, is paid off. The premiums increasing is probably down to the policy being "reviewable" which means the premiums start off lower but will increase over time - suprised though its going up every month. Its not something I would ever use though.

john banks

Why is a financial adviser not selling? I think you will only carry that argument off by selecting only one part of a definition of the word sell. Even without commission it still seems to me to be a sales activity. I don't think most advisers, never mind purchasers, know enough medicine to understand the full implications of what they are selling. For many of the sections of the ABI best practise document I can drive a coach and horses through the definitions to remain convinced that for me this is an umbrella with holes in it when it isn't raining, sold by the misinformed using scare tactics.

markjmd

iTrader: (11)

Yup, that's exactly what I thought, and why I found it pretty bizarre that someone would be sold such a policy if that debt isn't currently being paid off out of their salary (and the person whose salary is paying it off already has cover of their own).

Not according to Andy B though, who seems to think this is perfectly normal, go figure.

Dingdongler

In terms of critical illness in general I think it may be one of the very few times I've got a decent deal from the financial products industry.

This is only so because I took it out years ago straight out of medical school. So I'm covered for things that in reality aren't as 'critical' as they were twenty years ago ie low grade prostate cancer, having a coronary artery stenting/angioplasty, contracting HIV (occupational risk btw) etc.

These are of course serious events but not the death sentence they were before. It won't pay out a huge amount about circa £300k. Enough for me to know the kids have their school and Uni fees paid for.

afaik these conditions are no longer covered under most critical illness policies

cster

Yeah - some of the covers provided by the early medical professional mutuals like Medical Sickness Society are certainly well worth hanging on to, but as time has passed, the cover became more expensive and less comprehensive.

AndyBaker

What the hell are you talking about.

markjmd

iTrader: (11)

If that wasn't simple enough English for you to comprehend, then quite honestly I wouldn't want to waste my time reading anything you might have to say about it (or about anything else, for that matter).

AndyBaker

It clearly wasn't please explain.

john banks

It seems obvious from here what he was saying. Why insure someone to effectively protect a mortgage when they are not the one earning to pay it?