Critical Illness/Income protection insurance cover

**SueEllen** · 7 August 2011, 14:37

For income protection insurance now you have to use a broker you cannot do it yourself.

Though there is a broker who doesn't offer advice but I don't advise you to use them as you may not be covered by the polices they offer due to being a contractor.

If you do a search there is more information on whether the company should pay for it or you should yourself. Plus ask your accountant as well.

My income protection was taken out before I went back to contracting but my policy covers me when I'm not in a contract. Other posters have different policies and aren't covered when they aren't in a contract.

You also need to find a policy that won't force you to work in another profession if you can't work in your main one.

In regards to claiming if you want a lower premium then you need a waiting period of 3 months or more before you can claim so a limb in plaster isn't really claimable as you won't be in plaster long enough. Plus having one limb in plaster shouldn't stop you from doing things it just means you have to alter how you do them.

I don't have critical illness but again is worth taking advise over the policy as some insurers are apparently awful in the number of illnesses they cover and how they look at your family history.

**centurian** · 7 August 2011, 15:30

Personally I wouldn't touch it with a barge pole, but everyone to themselves.

Insurance companies don't exist to provide a public service - but to make money for their shareholders. They do this by paying out less than they receive in premiums - actually that's not strictly always true, but for the purposes of illustration, let's assume so.

To do this, they often arrange their "products" in such a fashion that it has all sorts of get-out clauses and exclusions.

You might get a "good" policy - there are plenty of people that have been glad they took out insurance. But as Forrest Gump says, you don't know what the chocolate contains until you've bitten into it.

Which means you don't even get peace of mind. You just trade one problem for another. Fear of cashflow during illness is replaced by fear of insurance company paying out in the event of illness.

**ChrisPackit** · 8 August 2011, 07:14

Hi

I took out a policy with Aviva a couple of years ago which covers me for when I can't work through ilness etc. The lead time is 3 months so I can't claim until this has lapsed and I beleive it costs me around £45.00 a month (mid thirties, pretty fit guy)

What made me look into this, is my father had one of these policies taken out in his forties but had to retire from work work with ill health around 50. That was with Aviva too, and he said it was one of the best things he's ever done as financially, he only paid around £2000 of premiums, but as he approaches 60 now, has had well over £100K out of the policy.

Makes sense I guess.

**Dearnla** · 10 August 2011, 15:02

Income Protection Insurance is all well and good if you are a permie, but if you are a Limited Co. contractor paying yourself minimum wage (£11,600 per annum?), the most they'll cover is that (minus the qualifying period of 4-6 weeks) - NOT your Dividend income, nor the missus' dividends, as a friend of mine found out the hard way.

So, 10 grand down on the deal, he cancelled the policy as a waste, deciding to put the money in the bank.

Critical illness cover is a gamble too, as they only cover certain conditions in certain circumstances and only upto your wages again.

Frankly, stick the money in the bank for a rainy day (see "Warchest") or get a permanent job. And even they only pay full salary for 6 months these days....

**craig1** · 10 August 2011, 15:09

Back in 2007 I had a fairly nasty sporting injury where I snapped one of my hamstring tendons off the bone. The repair operation meant I was completely out of action for the best part of two months and in reality three because I couldn't reliably put pressure on my leg for driving or commuting. That was three months of revenue lost.

I still don't have insurance as the premium would be far too high to match even half of my typical income, I'll continue to take the risk and treat any extended downtime as an involuntary benching. I did do some digging around though and key worker insurance worked out at the most financially appropriate product for me as I could prove how much my business had made from my direct efforts over a sustained period of time, what I took out of the company as income was irrelevant.

**Dearnla** · 10 August 2011, 15:15

Which goes to prove that the right Policy might help, but not Critical Illness cover or Income Protection.

**JennaB** · 14 August 2013, 12:08

self employed income protection

I just looked up "Self Employed Income Protection" and found an independent insurance broker who was really helpful. I was told by my financial adviser that it was really important to get ‘Own Occupation’ cover, google it to find out more but it basically means you will get the payout if you can't do your own job as SueEllen was saying.

Also with my policy it was fine to include my dividends in the earnings.

**flipFlop** · 15 August 2013, 17:32

Originally posted by Torrango View Post

Hi all,

Does anyone here take out critical illness and/or income protection cover?

The more gullible might.

**Power Mortgages Ltd** · 15 August 2013, 19:37

Originally posted by Dearnla View Post

Income Protection Insurance is all well and good if you are a permie, but if you are a Limited Co. contractor paying yourself minimum wage (£11,600 per annum?), the most they'll cover is that (minus the qualifying period of 4-6 weeks) - NOT your Dividend income, nor the missus' dividends, as a friend of mine found out the hard way.

So, 10 grand down on the deal, he cancelled the policy as a waste, deciding to put the money in the bank.

Critical illness cover is a gamble too, as they only cover certain conditions in certain circumstances and only upto your wages again.

Sorry Dearnla but you're wrong here.

Most income protection policies will cover salary and dividends and there are even policies which will cover the other half's salary and dividends if the Limited Company is split between husband and wife.

The general rule of thumb is that they will cover a figure of circa 50% of the total salary and dividends but this is a net payment each month, not 50% which you are then taxed on. Why dont they pay the full 100% of your salary and dividends? Well, would you want to go back to work if you were earning the same amount sat at home or sunning yourself on a tropical island care of the insurance company?

I'd suggest the policy that your friend took out was seriously missold if they were of the impression they could claim on salary and dividends and have been paying for a policy on that basis. It may be worth pointing your friend in the direction of the initial advisor who sold him/her the plan but it was probably a fairly cheap plan covering a bare minimum if it didnt cover dividends too.

Critical illness does only cover certain conditions yes but it does not depend upon your wages at all. You could be unemployed and cover yourself for £1m of critical illness cover if you so wished (it would be very expensive)!

SueEllen is right in the comment she made about own occupation, if you are going to take an income protection policy, make sure it is own occupation otherwise if you can perform duties in a lesser role, the income protection policy provider would probably insist you had to go and do that but if you cannot do the role you were doing before what kept you off what then with an own occupation policy you would continually be paid under the plan.

A couple of interesting facts as a point to think about:

A quick look on the British Heart Foundation website shows that:

"We estimate there are 900,000 men and more than 400,000 women living in the UK who have had a heart attack. More than 750,000 of these are under the age of 75"

British Heart Foundation - BHF Facts

I know this next one is a US site and I'd like to think us healthier Brits wouldnt be as bad, but it gives you a stat for the chances of contracting the different types of cancer (pretty morbid stuff I know):

Lifetime Risk of Developing or Dying From Cancer

A couple of scary number there for us lads:

Lung cancer 1/13
Prostate cancer 1/6
Colon cancer 1/13
All invasive sites 1/2

I have life assurance and critical illness cover personally and if anything I wish I had more cover as I know how much of a saving grace it would be for me or my family if ever a claim was required (which hopefully it wouldnt be).

The common attitude is to think 'it wont happen to me' which puts a lot of people off taking cover as they generally think they will be immune to these types of things but do you think the people diagnosed with cancer or who suffered a heart attack ever thought it would happen to them? As the advert says, cancer doesnt discriminate old, young, fit and healthy or not so fit and not so healthy.

I do find myself puzzled when I come across a client who has contents insurance on their property, mobile phone insurance, pet insurance or any other form of insurance which isnt compulsory yet they dont consider insuring one of the most important things to them, their life and health as a priority.

Critical Illness/Income protection insurance cover