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First things first, although I work in Mortgages/Insurance this is not about generating business but more market research.   The thread is inspired somewhat by the untimely death of a good friend of mine. 

A mate of mine from nursery was put to rest last week, he suffered a massive heart attack at the age of 33.   He left behind a wife and 3 year old kid, he had no protection.   He'd discussed it with me but then came to the conclusion that at that time it was a payment he couldn't justify, we were due to do a review at the end of July when his financial year ended. 

If you have any protection what do you have and why?

If you don't why not?

Previously, I'd touch on this with people when arranging a mortgage but would shy away if any resistance, going forward I think I need to make this a primary concern. 

I've got about £400k of life insurance separate to the house.   Think anyone with a kid should have it if you are the main breadwinner as the premiums seem pretty insignificant to me.

Sorry to hear about your friend - his wife and kid must be crushed. 

Everyone was crushed.  His wee laddie doesn't understand yet, but he now has about 200 step-uncles! 

Mortgage covered plus about six years net income through death in service benefit. I was surprised to find out last week that the latter counts towards my lifetime pension allowance, got some planning to do about that one.

I've got a £300k life insurance policy which costs £21/month

I don't have any kids or other dependants but the money is intended to pay off all my debts and leave my sister with my house and a few quid if anything should happen to me. The policy is placed in trust for IHT purposes and also so that it pays out pretty much instantly on death without having to go through all the probate hassle.

Terrible thing that happened to your friend. Really can't believe that he wouldn't have some form of cover because he couldn't justify the payment. Then again it's the people who need insurance the most that tend to be the ones who can't afford it :(

I dont but i dont have a mrs or kids. If i did I would get some to cover my income/mortgage.

Indeed Death in Service benefit is approved under the same tax legislation as pensions with regards to the Lifetime Allowance. For higher earners and now even modest earners the reduction in the lifetime allowance is a headache that can mean their combined pension pots and life cover exceed the LA.

There is an alternative insurance product called Relevant Life Insurance, which is similar to Death in Service cover but does not form part of the Lifetime Allowance. A good IFA will be in a position to explain/advise in more detail.

We have life insurance to cover us for the 2 mortgages we have and then also a critical illness policy for me and then we took out family income benefit for each child to the tune of £25k per child up until they would turn 21 which pays out the level sum each year on the anniversary of one or both of our deaths and basically means whoever would be looking after our children should we both pass at the same time but if we passed when Max was say 19 it would only pay for 2 years in his case and 4 in Ivy's but doesnt financially burden who we have decided would look after the children in this event and also means if something happened to just one of us the other would be mortgage free and have an amount of money that doesnt put pressure on them without changing the kids lifestyle.

I'm never too sure about the critical illness policies these days. Years ago they were brilliant but then there were a lot of people who got paid and didn't die which the insurers obviously didn't like. It was almost worth having a ball lopped off or a slightly dicky ticker to get your mortgage paid off.....

These days from what I can see it has to be absolute curtains or you don't get paid in which case I can't understand the increased premium they command. Yes it gives you security in your final few months but you wouldn't want to go blowing the lot in your final days and then leave the family skint anyway.

At the moment I've got nothing - but I'm getting married next year and I had already decided that would be a good point to look at everything and decide what we need going forward.

Actually when I read back my post I realized it wasn't critical illness but Income replacement that we had got for me as I am the main breadwinner and from what my adviser said was better for the reasons you state than a critical illness policy.

Not sure this is true.  My mum got diagnosed with breast cancer a couple of year back - big operation and then given all clear.  Insurance company paid out with no arguments at all and the money put her mind at rest during the long post operation recovery period.

She had the policy for about 20 years though, so maybe newer polices aren't as good.

Some of the older policies are better in terms of critical illness, the newer ones are more stringent simply because people live now after events that would previously have been considered a death sentence.   

Some good responses and I am glad people see the need for protection. 

Believe it or not, I don't but after last week I am in the process of getting it all sorted, for me it was never about cost, I just thought I was too young to consider it.  I though when I hit 40 that would be the right time. 

Think I get 3 years my salary from work insurance scheme, but I should check....

Cheers guys. This thread has reminded me to sort mine out now i'm no longer employed.

We had critical illness cover when we first got a mortgage but scrapped it. Similar to reasons above, unless you actually croak it they don't pay out and the restrictions of current illnesses make it very hard to actually be covered.

Cheapest way to protect your kids (ignoring cover to pay off debt) is a basic family income benefit plan (death cover which pays out monthly tax free payments over the remaining term of the contract, basically an old fashioned term assurance plan).

Because it is taken over a limited term, say until the youngest child is say, 16 or 18 years old, it is relatively cheap, targeted cover when the need for protect is there.

Same happened with my wife last year. Luckily it was caught early and apart from 5 years of pills to reduce the chance of reoccurrence she is fine.
When I checked their critically illness policy rules online I thought she would get 20% of the full amount......but on ringing them they said it would be the full amount. We took the policy out about 7 years ago, So as you say I think newer polices are less generous.

It's all about advancement.   There are some old policies that are very good and there are some that aren't as good bit like anything.   A good advisor will be able to and should compare old covers with new cover if required and advise on what represents the best value for money.   

Ideally if you have a policy from many moons back you want it to be index linked.   

Thanks Ace. Mercer gave us a brief overview of the latest changes to the LA, thresholds and the 40k limit which is affecting a lot of us at work. The DIS is a non-contrbutory benefit and it feels slightly perverse that opting out of a 'freebie' is potentially the right thing to do.

I have some simple term insurance from several years ago.  It was just a bit more than the mortgage at the time.  I am sure my wife can support herself with the kids if the mortgage is paid off, especially given I have paid about two thirds off already.

I think critical illness is an absolutely dreadful product.  Some people will have critical illnesses and be back at work in a few months, some will be back in 5 years.  Each can get the same money.  Or if you are unfortunate, you aren't covered at all for whatever forces you to miss years of work.  So what can be like a lottery win for some is a terrible bad beat for others.  Then some of these "lottery winners" will have gone out and bought the Mercedes only to die a few years later with no life cover as the whole thing was wrapped up in one policy and they weren't ever getting cheap life cover again once they had a heart attack/cancer.  Whole thing is and always was an expensive bag of bollocks in my view.

Before critical illness took off people who wanted sickness cover bought PHI.  You got sick for 12 months, you got paid an income for that period and that period alone.  Wasn't that expensive and you usually bought it on top of life insurance.  Commission was a lot less than Critical illness, and Critical Illness became more popular.

I don't have either as I have enough savings to cover a big chunk of illness, and have always been a gambler. If I had to buy one, PHI just seems a far superior product. 

I think PHI and critical illness commissions have always been the similar, the difference is critical illness premiums tend to be higher and as commission is premium based, the bigger the premium the more the commission.

The arguments for PHI and critical illness cover are different.

PHI should definitely be bought before CI cover IMO, however if you can afford it critical illness cover has a place.

CI cover buys you time and options. With medical technology moving on, people who say have a heart attack or get cancer are more and more likely to survive longer,

If you are in a stressful job and have a heart attack, your PHI will kick in but will stop paying out when the Doctor says you are fit to go back to work.

Do you want to return to the same stressful job full time? If you have say £100k CI cover it buys you time to adjust.

When Critical illness started it was part of a flexible whole of life iirc and paid the highest commission.  Term assurance type variations mutated from that.  It used to get added on to mortgage endowments...

CI def is a problem policy that was invented to be sold rather than precisely cover a customer requirement.  The needs could be better covered by PHI and a terminal illness payout option on life assurance.

What products like this should i have?  I currently have nothing at all.  41 no missus or kids.  No Mortgage.  No debts at all. No pension provision either.  Hold numerous years living expenses in cash/other liquid assets.   Should i have/need any of these products?  One for the experts.  I always think they are a total waste of time for someone like me.  Just another bad bet to avoid.

no point in winning a bet you cant collect.

As you have no debt and no kids, you really don't need life cover. Waste of money.

You can't take out PHI for income protection as you have no taxable income.

You could buy CI cover if you wanted to, but its expensive. You need to ask yourself if you were seriously ill how would you pay the bills? You have savings to cover the sh!t hitting the fan? EDIT just re-read your comment on numerous years living expenses covered by savings. Sounds like you have it just right  :)

That's my only worry paying the bills is something stops me clicking mouses for 10+ years AND betfair goes south. I could be seriously ill and still do my job as long as i could see two screens and pay someone else to click the mouse.  Big priced double given i love a drink and someone who i really respect as an odds compiler said i am odds against to live to 65 anyway given my lifestyle.  Just makes these types of products totally irrelevant to a guy like me.  Thanks for confirming what i think.

I think it's probably worth you looking into the cost of  term assurance say for 25 years or so. No clue of the price these days but you can be sure it will be cheaper for you today than in the future. Reason I say this is that your circumstances could easily change and there may be someone in the future that you'd like to leave a lump to.

Such a shame to hear stories like this and particularly when Term Assurance is so inexpensive for a man of his age.

I’ve just looked at illustrative rates for a £200,000 Term assurance policy for a 30 year old male, non-smoker with a clean medical and lifestyle record. It comes in at less than less than £9pm. Peanuts. The same policy for a 40 year old male is still under £16pm.

I agree with this. I've always perceived PHI as a core protection product whilst CIC can complement PHI but at a cost.

PHI can be very expensive depending on occupational class. For a manual worker it is often prohibitive and even for professionals there are quirks - it has always amused me that it can cost almost twice as much for a teacher than an accountant. Insurers don't like teachers because of their  propensity to be off long-term with stress related illnesses!

 

I think the important thing here is not everyone needs cover.  Arb certainly doesn't by the sounds of it there is obviously more questions you really need to go through to decide if you have 1) a need and 2) a want. 

There are people who don't mind paying just for peace of mind.   

I'd argue a man/woman with a mortgage and a family should always have some protection.   Even those who are mortgage free should have something in place if they have kids/family.   I'd go worse case scenario and work back from there and decide what the need is v the budget.   

Has anyone had any dealings with vitality? 

As of tomorrow I am going to have access to them, today I am going to be doing a whole bunch of reading to make sure I get my head around it, but the rewards look pretty decent and I am almost certain to set myself up with a policy so I can take advantage.  Pretty sure I can make enough savings each month to cover the cost of the policy, and probably be quids in as well. 

No direct dealings but have a few clients that are using vitality

I tend to read the personal finance/money sections in the papers and recall Vitality being panned. I couldn't remember what for so googled "vitality rewards reviewed" and at the top was this:
https://uk.trustpilot.com/review/vitalityhealth.co.uk  - not many happy customers there!  TBF that was Private Medical Insurance and this thread is about life assurance.

What are they saying? 

Cheers pal, I will give this a read over today.  I don't want to espouse the benefits of this for some short term gain if it's going to result in a long term loss of customers. 

Most have recently switched (or considering) for health insurance cover for their workforce as it seems fairly cheap and flexible etc. Not heard anything negative as yet but interested if others had any feedback as it seems to be becoming more popular for owner-managed businesses

I think it's the benefits and the real life savings from what I am hearing.  I really need to read up on it more. 

I done myself a quote with them on Saturday just to see and it was a wee bit more expensive than other life/IP quotes I have looked at but pretty sure I can claw that back on the benefits as long as they stack up. 

Oh, that isn't great.  I only read the first page and a half.  I couldn't take anymore.  I think I might me giving this one a miss.