# Is serious illness/income protection cover really needed?



## SeanHow (3 May 2006)

Hey 

Sorry if this is in the wrong place. 

Me and my partner are just about to get the keys of our house.  The closing date is next monday.  

Our mortgage/insurance broker has advised us (a lot) that serious illness or income protection cover is something we should really take out.  

We're not too sure, at 24 and 25, that we really need this cover.  Would we not be better off putting the money away (between €80 and €100 a month) into savings, then maybe look into taking out this kind of cover down the line.  

The broker (who has been great throughout) came off slightly like they were on the hard sell when it came to this so that has kinda put us off. 

Basically we're confused so any comment would be helpful.


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## X-Man (3 May 2006)

as far as i know is that this type of cover is only paid out after 16weeks out of work......so from week1 to week16 where will your income be coming from...will your current employer pay you till week 16????

income protection to me is very dodgy


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## ClubMan (3 May 2006)

Following on from the above you need to be clear on in what circumstances and for how long such cover will pay out and make sure that the policy meets your needs. Some such policies have quite severe restrictions on when and for how long they will pay out (e.g. various illness exclusions, only paying out if you can't do *any *job, not just your main profession etc.). If you are considering such cover then get independent, professional advice and don't be unduly swayed by what a broker with vested interest in flogging you such a policy might "advise".


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## SeanHow (3 May 2006)

Hey X-Man

yeah it was something like 16 weeks alright.  the broker said if we ever had an accident that kept us out of work long term we'd be glad we went with it .. 

im not really convinced though.  

has anyone else out there went with it?  or are there any other insurance products out there youd recommend a couple get - aged 24 and 25 with a 9 month old baby and just bought a house?  would serious illness cover be a good idea?


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## ClubMan (3 May 2006)

Don't forget that if you are out of work then you may be entitled to various _Welfare _payments especially _PRSI _linked benefits if you have the required contribution history (e.g. _Unemployment Benefit, Disability Benefit, _other family related payments etc.). Not necessarily a huge amount but something to fall back upon.


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## SeanHow (3 May 2006)

ClubMan said:
			
		

> If you are considering such cover then get independent, professional advice and don't be unduly swayed by what a broker with vested interest in flogging you such a policy might "advise".


Hey Clubman, thanks for the reply.  

Would it be a seperate broker to go for independent, prodessional advice or is there someone out there who would be able to advise and have no vested interest?


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## X-Man (3 May 2006)

Sean take the above advice and get professional opinion.all i can say is that to be out of work for 16weeks is a very long time and as clubman said...you maybe entitled to help from the welfare etc.....


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## SeanHow (3 May 2006)

X-Man said:
			
		

> Sean take the above advice and get professional opinion.all i can say is that to be out of work for 16weeks is a very long time and as clubman said...you maybe entitled to help from the welfare etc.....



Yep sounds like the sensible thing to do.  Thanks for the help guys


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## CathyK (8 May 2006)

Hello Sean,

Permenant health Insurance pays out either at 13/26/52 weeks, it covers your mortgage payments and other costs (depending on the level of cover) up until retirement age if you are unable to do your job, the main providers of this type of cover is Irish Life or Friends First. In my experience the Friends First policy is the best on the market.

It is always difficult to know if you need this type of cover, as we all think that it will never happen to us, but trust me it can, I know that when you take out a mortgage the additional cost of this type of cover can be considered a large amount of money, however the Friends first policy remains the same for the duration of the policy, so what might seem like a large amount of money now will not be in the future.

I have had healthy fit clients take out this policy thinking that it will never be needed, and have thank god they had it in place when it came time to making a claim, as it has taken the pressure off them, especially in time of illness.

Please take your brokers advise, it really is money well spent, because someday you may need it.


www.keatingfinancial.com


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## markowitzman (9 May 2006)

would agree with Friends First recommendation for PHI.
serious illness cover in comparison is expensive and of questionable value in my opinion.


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## Buddha (19 May 2006)

Of course people will say that you'll be glad you had it when you do get sick. I think it's a bull**it policy in general.

I always decided against it on the basis that my employer wouldn't turf me out on street after a few weeks sick and if I was any sicker than that I wouldn't be too worried about how I was going to pay for the bloody house anyway.

I suppose it comes down to how risk averse you are - would you prefer to have the cash in your back pocket and take the risk of having to sell the house down the road???


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## wheeler (19 May 2006)

I got independent advice recently on this and was suprised that it was recommended to get it considering all the facts. I am a contractor so fair enough, if I don't work I don't get paid, but taking into account the fact that the cover doesn't kick in until after 16 weeks AND all the 'ifs' and 'buts' involved in determining if even at that stage you will qualify I really was not enamoured by it. 

Everyone's personal circumstances are different - in my case I am single, no dependants and have a supportive family so I already have a certain amount of backup with little responsibility.

And, like a previous poster, I figure if I am so sick I can't work for 16 weeks that then the last thing I would be worried about is income protection.

And if you are cynical - you can be sure if the illness is terminal then the house(s) can be rented and take care of itself and there will be someone there ready to take care of you on the back of an inheritance.


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## power1 (19 May 2006)

If you are in a union, they may have an income continuance scheme where you pay a small % of salary and your wages are guaranteed if you ever go sick longterm. A colleague of mine was glad to have it having just bought a new apartment, he was involved in a serious accident and will be out of work for a year but wont be down a cent cause of his cover. 

Its like any Insurance...you probably will never need it but you're glad you have it when something goes wrong.

Incidentally...Im in my twenties, don't drink or smoke and drive carefully so Im taking my chances by not going with mortgage protection/income continuance etc. Hopefully I wont regret that decision. I might change my mind when im older.


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## Bongo (25 May 2006)

I would never have taken out such a policy in the past, but you never know what life has in store!

I was earning a six figure salary in a very stressful job, but never thought I'd loose the plot. I've been out of work for the past 7 months due to stress/depression thanks to work.

Disability is a whole €165 per week (max) which wouldn't pay the food bill, let alone the mortgage, utilities, car, etc.

Luckily my employer has a disabily scheme as part of the pension scheme which pays me 50% of my basic salary after 26 weeks. I'd be screwed without it!

I'd definitely take out such a policy if your employer doesn't offer such coverage. Most policies don't cover stress related illness, so read the small print.

Also, my BIL was out of work a few years ago and the policy covered his mortgage payments for over 12 months.

In summary, I'd take out the policy unless you have alternative cover elsewhere.


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## RS2K (26 May 2006)

Buddha said:
			
		

> Of course people will say that you'll be glad you had it when you do get sick. I think it's a bull**it policy in general.
> 
> I always decided against it on the basis that my employer wouldn't turf me out on street after a few weeks sick and if I was any sicker than that I wouldn't be too worried about how I was going to pay for the bloody house anyway.
> 
> I suppose it comes down to how risk averse you are - would you prefer to have the cash in your back pocket and take the risk of having to sell the house down the road???



I think that's a very short sighted view.

Properly structured PHI can pay claims from 13 weeks from disability all the way through to retirement age, be that 55/60/65.

Premiums are suspended during claims, and it's possible to insure  cpi increases during claims too.

Furthermore all premiums are tax deductable.

If you hurt your back and were out long term maybe your Employer might change his mind about turfing you out? 

As has been mentioned, proper advise is vital.


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