Reply to: Critical Illness and life cover

[clearedforlanding]

Please make sure you have a warchest as well as this. I have depleted my warchest and have been waiting for a health related indurance payout for nearly 2 years. When i say waited I mean "have lawyered up and am putting on as much pressure as possible".

It is important to remember that insurance companies have entire departments dedicated to looking for technicalities on why not to pay out. Even where there are no technicalities insurance payouts often are a long drawn out process.

[saptastic]

Not sure what there premiums are like but info here : https://www.contractoruk.com/insuran...nce_cover.html

[BillHicksRIP]

Would you mind sharing who you went with and what premiums you're looking at? I still haven't pulled the trigger on a policy and I really should.

[l35kee]

So after all that time finally got my life insurance and income protection cover sorted.

I'm probably in better health than 99% of people, but due to a pre-existing condition (no issues from it, but they didnt exclude it or issues from it either, which is good), my premiums automatically have a 200% loading on top, literally just for having it! Awesome..

Never felt better for spending so much money a month on something I hope will be money down the drain..

[Spoiler]

I need to look at this again. I have life insurance policy in place, but am looking at Income Protection in case something happens that doesn't kill me, but I'm incapacitated.

I got a quote earlier in the year, paying out £4,000 per month, which cost £120 per month.

As has been mentioned, I was planning to go for something like this to start with, and then review it in a few years after building up additional savings.

[kaiser78]

WIB is right there. I'm pretty much in the same situation. 2 kids, ages 1 and 3. Wife doesn't work, but is studying open university so she can go back

I recently sorted all this out and got £500k life cover. I also got a critical illness/life policy for £100k, so I wouldn't have to worry about work if I was diagnosed with something that's covered, or my wife would have the extra £100k otherwise. I pay a little over £50 a month in total.

My joint CI and Life Cover policy costs me £150 per month for £200k cover over 25 years, taking me up to mid 60s.

My kids are a bit older and are just starting secondary school, and so I am also planning to take out some relevant life cover in addition - £200k for 20 years is around £50 per month for me and the wife each, which through the company will come to ~£40 per month.

I may then reduce my CI/Life Cover to around £100-50k depending on the numbers, which my IFA is to provide.

[Antman]

I remember a thread like this a few years ago and the gist for calculating the premium was to make sure that the figure would keep your dependants comfortable but not go putting ideas into their heads!

[WordIsBond]

If you can get the same rate in a relevant life policy, definitely do the life cover through the company, that is much more tax efficient.

If you want to take the risk of doing the critical illness as a relevant life policy, the same applies. But there is indeed a risk that this will end up being ruled invalid at some point, critical illness within a RLP is an innovation that has not caught on widely and is controversial.

If you do the critical illness outside the RLP, there may be a small tax efficiency in doing it through the company, as a benefit in kind. The maths for this depends (in part) on whether or not you use the employment allowance and pay yourself a salary up to the personal allowance, or only use a salary of £8K.

I run both, and private medical insurance, through the company. Saves on corporation tax, incurs employer NI for benefit in kind on the non-RLP insurance.

[BillHicksRIP]

I got it through a broker. Both policies are with vitality.

Are both of these being paid by the company or personally? Very interested myself. Thanks.

[FrontEnder]

Who did you get it with if you don't mind me asking? Just sorting a mortgage and the broker is pushing LI/CI at me, want to ensure I'm getting best deal I can..

I got it through a broker. Both policies are with vitality.

[l35kee]

WIB is right there. I'm pretty much in the same situation. 2 kids, ages 1 and 3. Wife doesn't work, but is studying open university so she can go back

I recently sorted all this out and got £500k life cover. I also got a critical illness/life policy for £100k, so I wouldn't have to worry about work if I was diagnosed with something that's covered, or my wife would have the extra £100k otherwise. I pay a little over £50 a month in total.

Who did you get it with if you don't mind me asking? Just sorting a mortgage and the broker is pushing LI/CI at me, want to ensure I'm getting best deal I can..

[PerfectStorm]

Good advice

Now isn't this better than telling people to use google or speak to their insurer?

[WordIsBond]

Thank you so much I really appreciate that response. I'm just about 2 months into my first contract after being a permie for 10+ years and had never given this much thought before. You've really put it into perspective for me!

Good! Best of luck.

[l35kee]

WIB is right there. I'm pretty much in the same situation. 2 kids, ages 1 and 3. Wife doesn't work, but is studying open university so she can go back

I recently sorted all this out and got £500k life cover. I also got a critical illness/life policy for £100k, so I wouldn't have to worry about work if I was diagnosed with something that's covered, or my wife would have the extra £100k otherwise. I pay a little over £50 a month in total.

Thanks, to be honest I was getting a lost with all the options... This helps provide some kind of context!

[l35kee]

What I pay won't be helpful because I'm a lot older than you. But I hope what I do say is helpful. If that's all the cover you have, you probably need a swift kick in the rear.

If you have a heart attack and die tomorrow, is your wife left with a mortgage? Do you know how far £250K will go for her? Do you want your kids to lose both parents at once, you to death, her to work, because you didn't buy enough insurance? Two toddlers?

So she's not pursuing a career so she can be home for you and your kids, that's commendable. A lot of people disrespect that decision, but I think it's great, and that a lot of families would be better off if one parent was home with the kids. The thing is, though, it should be respected by you. Wouldn't it be nice if you made sure she was taken care of, since picking up a career (if something happens to you) may be completely impossible, after being off work, and having traumatised kids to care for?

£14pm for £250K. So, how about £28pm for £500K? Don't you think she's worth that extra £14pm to have her be at least a little more comfortable if something happens? I can't imagine any contractor who makes the kind of money you are undoubtedly making struggling to come up with 30 quid a month to make sure his wife and two young kids don't have to keep a tight budget if something happens. Funeral costs, she'll probably need to take a holiday with the kids to deal with the trauma, and suddenly a tenth of that £250K is gone already.

If you have a house mortgage-free and maybe £100K in your warchest you might be close to enough insurance. Maybe. But I bet a guy with two toddlers hasn't been playing this game long enough to have that. So buy some real insurance. She's worth it and your kids are worth it. Personally, I'd think closer to a million insurance is better given the age of your kids, especially if there's a sizable mortgage.

Illness cover -- I'd probably invest in that, too. What you have is paltry. But it is very expensive. My recommendation to my sons is to buy the stuff and run it for about three years, but also set aside dedicated savings, and once they've racked that up, drop the cover, but keep putting some into that dedicated savings. Because it is expensive, but in the short term until you get the savings built up, you want to protect your family. If you are ill, perhaps you could be home with the kids while the wife works -- it's not necessarily the same devastating family effects. So you might not need so much insurance for that purpose.

Good luck -- but buy enough insurance to show your wife you value her enough to provide really well if something happens. She'll appreciate it even if it is (hopefully) never needed.

Thank you so much I really appreciate that response. I'm just about 2 months into my first contract after being a permie for 10+ years and had never given this much thought before. You've really put it into perspective for me!