# critical illness V income protection



## Siabh41

Aged 41, I am the main breadwinnner, secure pensionable permanent job earning c €55k pa - no mortgage, no dependents, as yet! I would get full pay for 6 months and half pay for the following six if I took ill.

Recently I took out Critical Illness cover @ c. €80 pm for a €250k payout.

a) Would I be better off cancelling this and taking out income protection.

b) I did not mention (as I did not think it relevant) when taking out the critical illness that I had been on anti-depressants for four months several years ago. However I recently heard of a woman who got breast cancer and they refused to pay out as she had not disclosed that she had been on anti-depressants previously. So this has me concerned too. I'm afraid if I continue to pay critical illness for several more years, that if it came to a claim it would be rejected on similar grounds. 

Siabh.


----------



## LDFerguson

Critical illness covers only the illnesses listed in the policy conditions.  Income Protection covers you for any illness or accident that prevents you from working for longer than the "waiting period".

An Income Protection premium qualifies in full for tax relief at your highest rate.  A Critical Illness premium doesn't.  

In your situation, it should be possible to tailor an Income Protection plan to dove-tail with your sick-pay, i.e. start after six months and increase after twelve.  

It is very important that you answer all questions on any application for any form of insurance fully and truthfully.  The insurance company will decide what's relevant and what's not.  You should tell your Critical Illness insurer about the anti-depressants now.


----------



## allthedoyles

critical illness cover is money down the drain unless you have a serious illness claim. I know a man paid in 9055 euro over 12 years and never claimed . When he went to cash in policy , he was offered 978 euro . Even Ombudsman could not help . 
By telling your insurer about a short term medical problem , will only increase your repayments long term .


----------



## ClubMan

allthedoyles said:


> critical illness cover is money down the drain unless you have a serious illness claim.


That's a ridiculous thing to say. It's like saying that any insurance is money down the drain because you don't get to claim. The point of insurance is that you are paying premiums to cover the worst case scenarios that could happen based on your own assessment of your risk in the relevant context. It's a payment for a service. 


> I know a man paid in 9055 euro over 12 years and never claimed .


Sounds like some sort of combined _CI _and savings plan. In my opinion such bundling of insurance and savings should be avoided.


----------



## LDFerguson

allthedoyles said:


> critical illness cover is money down the drain unless you have a serious illness claim. I know a man paid in 9055 euro over 12 years and never claimed . When he went to cash in policy , he was offered 978 euro . Even Ombudsman could not help .


 
It sounds like the man didn't understand what sort of policy he had at all.  The cash value and the insurance cover are separate issues.  



allthedoyles said:


> By telling your insurer about a short term medical problem , will only increase your repayments long term .


 
By not disclosing all relevant information at application stage, you run the risk of voiding your cover altogether.  Which would you prefer - (1) to pay a lower premium but find out that the insurance company may refuse a claim because you knowingly witheld information from them or (2) to pay a higher premium and know that any legitimate claim will be paid?  

In any event, one isolated episode of taking anti-depressants some years ago with no ongoing symptoms or treatment may not cause an increase in premium.


----------



## Nostromo

Could I please request some advice on this very subject?

As a self-employed, limited company IT contractor I obviously have no "safety net" (beyond savings) in the event of being unable to find work, and in fact there would sometimes be gaps between my contracts (so far no long ones, though). I have been considering an income protection policy (bills to pay, family to feed etc.) but have some questions:

- Is income protection available to people in my position at all, given that we are often temporarily out of work?

- How difficult is it to "prove" a claim, i.e. after the appropriate six months or whatever, do I need to convince the insurer that I'm unable to find work despite my best efforts?  (Is it anything like social welfare in this regard?  Would I be expected to move anywhere and work at anything, for example?)

- Is there a minimum lead-in time before a claim can be made?  My current contract ends in Nov/Dec, if I buy a policy now and end up out of work at year-end, will I receive anything from the policy? (after the specified waiting period, of course)

- Is it generally a good idea for contractors to take up income protection or is it overly expensive?

- How does the tax relief work?  Presumably it's set against the PAYE due on the wages that I pay myself from my limited company?

I'm 37 and in good health but as I said, I need to bring in a certain minimum every month to put food on the table (and keep the table from being repossessed, too!)

Many thanks,

N


----------



## LDFerguson

Income Protection only covers you for absences from work due to illness or accident.  Mortgage Repayment Protection cover will cover this, and redundancy also but redundancy cover is not available to self-employed people.

I'm not aware of any insurance that will cover you for gaps between contracts.


----------



## Nostromo

Thanks LD for that clarification, that's good info.

Allowing for this fact - i.e. that cover is only for illness or accident - I guess my amended question is, are there any differences between Income Protection for self-employed/Ltd. company directors (like me) and regular PAYE employees?  

Appreciate the help, thank you!


----------



## Siabh41

Do you suggest then in my situation that I would be better off with income protection rather than CI. I don't think I could afford both. Much appreciated.


----------



## LDFerguson

Nostromo said:


> Thanks LD for that clarification, that's good info.
> 
> Allowing for this fact - i.e. that cover is only for illness or accident - I guess my amended question is, are there any differences between Income Protection for self-employed/Ltd. company directors (like me) and regular PAYE employees?
> 
> Appreciate the help, thank you!


 
No difference in cover.  There's a more pressing need for cover as PAYE workers paying A1 PRSI qualify for State Disability Benefit in the event of illness (a little over €10,000 per year) but most self-employed people (Class S PRSI) don't get anything from the State.


----------



## LDFerguson

Siabh41 said:


> Do you suggest then in my situation that I would be better off with income protection rather than CI. I don't think I could afford both. Much appreciated.


 
All things being equal, I think Income Protection covers you for more possible illnesses and so, in an "either/or" choice, I'd pick Income Protection.  

However, before you think about cancelling your existing policy, you should first get quotes for Income Protection and then make an application to see what terms you're offered.


----------



## Jimbobp

A big benefit for someone like yourself Nostromo (i.e, a company director) is that the company can pay the income protection premiums on your behalf, the company can write off the premiums against tax (corporation) and you won't attract BIK. You can also cover pension contributions in this type of contract. 

Jim
www.powerinsurances.ie


----------



## bmerren

_- Is income protection available to people in my position at all, given that we are often temporarily out of work?
_Income Protection covers any illness any injury or any disability that prevents you from doing your job (not necesarily "any" job but "your" job). It does not cover you for loss of earnings due to being in between contracts. The maximum benefit you can insure is limited to 75% of your earned income. 

_ - How difficult is it to "prove" a claim, i.e. after the appropriate six months or whatever, do I need to convince the insurer that I'm unable to find work despite my best efforts?
_Your GP would verify your claim on medical grounds. The highest claims in Income Protection come from stress related issues or back problems. Both of which are hard/impossible to qualify and quantify. Yet claims payouts are between 80% and 90% successful. If you return to work at a reduced capacity (3 days a week) you can still get claim a proportion of your benefit (40%).

_- Is there a minimum lead-in time before a claim can be made?  My current contract ends in Nov/Dec, if I buy a policy now and end up out of work at year-end, will I receive anything from the policy? (after the specified waiting period, of course)_
Income protcetion only pays out for loss of earnings due to illness or injury or disability. It does not pay out for economic reasons. You have to be out of work on sick leave or for medicall reasons for 3 months before they will start paying your claim.

_- Is it generally a good idea for contractors to take up income protection or is it overly expensive?_
 It is a good idea for anyone self employed, because you are totally reliant on yourself and your capacity to generate income. If you get sick you are not entitled to any social welfare benefit. THe level of cover or the level of premium is decided by you so you limit the cost to suit your budget.

_- How does the tax relief work?  Presumably it's set against the PAYE due on the wages that I pay myself from my limited company?_
The premiums are tax deductable at your marginal rate but the benefit paid is also taxed - you receive it net of tax from the insurance company.

Hope this helps!


----------



## lyonsie

I was going to start new thread, but maybe someone give me information also.
Was injured in work (assaulted) in Nov. '05. Employer paid full pay for 6 months, half pay for further 6 months and pension rate of pay since. Have income continuance with New Ireland/Cornhill and it kicked in after the 6 months.
It is a constant struggle with them. Doctor to Doctor reports, forms to fill in etc. In April '07 they sent me to some 'occupational something doctor'.... and because I could carry out some limited movements he decided I was fit to return to work....

Then in October, a doctors report must have arrived on their desk, and they looked for further reports and started paying me again. Not satisfied with that, they sent a team over from the U.K. to carry out a 'functional capacity evaluation' on me in my home in January '08 and the report must have been in my favour as they are still paying my claim.
As I was only in my job for 9 years, my pension rate of pay is almost non existant. I receive illness benefit also and my IC makes up the balance to 75%, which I could not do without, so it is a policy well worth investing in.

I contacted the person with whom the policy was organised through my work, to see what I should do about the missing months as my health was not improved contrary to what the doctor they sent me to thought. He never seems to have a reply for me.
Can anyone advise me on this one please.

I would say though, if anyone can afford both of these insurances, then do it, as I really could not afford to live without the IC/IP.

My employer (Gov. dept) is in the process of pensioning me off due to ill health... what happens then.

Regards,


----------



## LDFerguson

If New Ireland is the insurer of your Income Protection, you should contact their claims department directly about the fact that you lost a few months of claim even though you were still unfit for work.


----------



## lyonsie

Thanks for that.   Would'nt you know it.... I received another form off them today to fill in, as they say 'my income continuance benefit is currently under review'...
The same info required all the time.... and an indication (in hours & minutes) how long I feel I could perform activities such as sitting, standing, walking, driving, bending, typing, housework, shopping, lifting..... as if I can afford someone to do the housework, shopping, driving etc.... it is all so frustrating.
They also want to know if I have been ill-health early retired and if so, when.... Should I inform them that it is in motion and hope to be shortly.
This insurance is worth having but lots of hassle to get.


----------



## RS2K

I.C. payments are under constant review. They are designed to pay you when you're not able do your job. Questions of this sort are to be expected therefore and quite frequently too.


----------



## NorthDrum

The most important thing for everybody is that they have sufficient cover that they are financially comfortable paying. In an ideal world MOST self employed people would take out both Critical Illness cover and PHI (Income replacement/protection), but there is an affordability factor involved so depending on each persons financial situation, one or the other product may be more beneficial. 

Lets say I get diagnosed with Cancer tomorrow and I have PHI cover which is payable upon my diagnosis (assume PHI claim is being paid), ok so I am getting up to 75% of my salary if I need significant time off (remember there is a deferred period of at least 12 weeks). Had I serious Illness cover I would potentially of received a lump sum (perhaps I had serious Illness on my Life cover attached to my Mortgage), to pay off my Mortgage aswell. Depending on my mortgage this could calculate to me getting more (if you take mortgage repayments into account) money in the long term while I am off work sick/recouperating then if I was working. And even when if I go back to work I have the comfort of knowing that my mortgage is paid off. 

There is also the question, do I want to go back to work part time or at work at all? PHI will only pay you while you cant do a specific Job whereas specified Illness could facilitate longer resting time (or early retirement depending on circumstances)

We are all looking for the minimum amount of cover to get us through any potential Illness but one thing people dont always consider is how they will actually feel while off work. Critical Illness and PHI cover are about peace of mind in the event of an unforseen Illness therefore unless you have critical Illness on a Whole of Life Policy there will not be any value attached to the policies unless an Illness claim is made and successful. These policies should be seen as something you have as protection that you hope you never need to claim on.

The best way to decide which policies are best for you is by asking yourself the question - How would it effect me if I was Ill and going to be off work for a significant timescale. Give it serious thought. Most people just want a figure and a policy without the nasty thought of actually being Ill but the people that sit down and give it serious thought are the ones that eventually find the right balance between cost, correct policy(s) and peace of mind.

Calculate out money/salary lost v total bills due/ average monthly spending.

Instead of looking at your critical Illness simply as a lump sum, try calculating it as income replacement. For example if it pays off your mortgage see it as an income of €x per month instead of one less bill. So for example if your salary takehome was 2k per month and your mortgage was 1k per month, you would still be 1k less off during illness. How does that effect your finances?

These are just examples of how you can look at PHI and Serious Illness. There is no quick answer to "which one should I choose" as it differs to us all and depends on how much we can afford v how it would impact on our lives if we didnt have it. Thinking about the effects income loss or serious Illness impacts on familes/people isnt about scaring us into taking out a policy, its about getting us involved in the realities and difficulties of life and preparing for the harshest of times (instead of doing what the Irish Government do and responding to troubles after the disaster has happened!). Yes these policies are only value for money when they are claimed, but boy are they worth it if you ever need them.


----------



## Jimbobp

Good point northdrum, but something to bear in mind is what the actual chance of claiming in the first point is. The 2 biggest reasons people miss work is due to back problems & psychological issues such as depression. A CI policy won't cover this, a PHI policy will, so you have a much better chance of getting a payment from a PHI policy than you would with a SIC policy.

www.powerinsurances.ie


----------



## RossieGooner

I have just taken out an income protection policy with insurety.

It pays me 60% of my gross income for up to 2 years if i cant work due to accident, sickness or busniess failure or redundancy (being self emplyed this was needed i thought.) I also get cash for each night in hospital due to accident and a lump sum for serious injury or death. Heres' the kicker though - if i remain claim free for 12 years i get every single penny i have paid in back.

I thought it was great cover anyhow, mainly due to the fact that i was paying for incme protection for 6 years with another company but was never going to see my money again unless i had a claim.

I have the email address and contact details of the bloke i was dealing with if anyone wants them.


----------



## LDFerguson

RossieGooner said:


> I have just taken out an income protection policy with insurety.
> 
> It pays me 60% of my gross income for up to 2 years if i cant work due to accident, sickness or busniess failure or redundancy (being self emplyed this was needed i thought.) I also get cash for each night in hospital due to accident and a lump sum for serious injury or death. Heres' the kicker though - if i remain claim free for 12 years i get every single penny i have paid in back.
> 
> I thought it was great cover anyhow, mainly due to the fact that i was paying for incme protection for 6 years with another company but was never going to see my money again unless i had a claim.
> 
> I have the email address and contact details of the bloke i was dealing with if anyone wants them.


 
Paying a claim for only two years is very poor compared with most Income Protection policies which pay you until you are able to go back to work, or your chosen retirement age.  

How do they define disability?  Is it "unable to carry out your own job" or is it something far more restrictive?


----------



## PaddyW

I'm 27, and a smoker. I have serious illness cover through my mortgage protection. Salary circa 2900 per month. Is it worth me taking income protection at my age. What would be the view of others? I've gottena quote from one company of 17.20 after relief to get 2097.70 monthly benefit, 26 weeks deferred period, up to 60th birthday with guaranteed premiums and indexation. How does that sound?


----------



## LDFerguson

PaddyW said:


> I'm 27, and a smoker. I have serious illness cover through my mortgage protection. Salary circa 2900 per month. Is it worth me taking income protection at my age. What would be the view of others? I've gottena quote from one company of 17.20 after relief to get 2097.70 monthly benefit, 26 weeks deferred period, up to 60th birthday with guaranteed premiums and indexation. How does that sound?


 

Is the €2,900 monthly salary gross or net?
What's your occupation?
How long will your employer pay you if you're out sick?


----------



## RS2K

Sounds ok. For more quotes consult a decent broker.

Might also be worth getting a review done. If you have PHI in place, and have VHI/BUPA/VIVAS (all of which enjoy tax relief) is a CI policy really necessary?

Just a thought.


----------



## RossieGooner

LDFerguson said:


> Paying a claim for only two years is very poor compared with most Income Protection policies which pay you until you are able to go back to work, or your chosen retirement age.
> 
> *How do they define disability? Is it "unable to carry out your own job" or is it something far more restrictive*?


 
Doctors cert to say unable to work. Any of those income protection policies u mention pay u back full premiums paid if you dont make a claim ?


----------



## ClubMan

RossieGooner said:


> Any of those income protection policies u mention pay u back full premiums paid if you dont make a claim ?


Why would they? The premiums are paying to insure the risk involved - not going into a savings fund. Products which bundle insurance/assurance and savings are often poor value for money anyway.


----------



## Bronte

There was a really good debate on RTE radio yesterday with Derek Davis and the head of Canada Life, anyone thinking of getting critical illness type of insurance should listen to it.  You must disclose EVERYTHING you have ever been to the doctor for even if the results show that everthing is ok.  One guy was refused his claim because he had a cholestrol test that was ok, but he hadn't told them he had had the test.


----------



## PaddyW

LDFerguson said:


> Is the €2,900 monthly salary gross or net?
> What's your occupation?
> How long will your employer pay you if you're out sick?



Hi LD.

1. 2900 is net
2. I'm an office manager
3. well, probably up to 4/5 months I think

Thanks


----------



## LDFerguson

RossieGooner said:


> Doctors cert to say unable to work. Any of those income protection policies u mention pay u back full premiums paid if you dont make a claim ?


 
No, but when looking at insurance to protect your livelihood, I'd be a lot more interested in what happens in the event that you DO claim.  If you're, say, 30 years of age and get the terrible news from your doctor that you're never going to be able to work again, what use is a policy that will pay your claim for a maximum of 2 years, compared with one that will pay your claim for 30 or 35 years?

Also had a quick look at the policy conditions and website and note that Insurety exclude back problems and mental or nervous illnesses.  The exclude pre-existing conditions (or anything _related to_ a pre-existing condition) for two years.  From what I can see, their premium doesn't qualify for tax relief, although a claim lasting longer than a year may be taxable.  Other income protection policies qualify in full for tax relief at your highest rate on the premium, which can knock up to 41% off the cost, although a claim will also be taxable.


----------



## PaddyW

LD, not sure if you saw my reply to your questions so here they are again!

1. 2900 is net
2. I'm an office manager
3. well, probably up to 4/5 months I think

Thanks


----------



## LDFerguson

PaddyW said:


> LD, not sure if you saw my reply to your questions so here they are again!
> 
> 1. 2900 is net
> 2. I'm an office manager
> 3. well, probably up to 4/5 months I think
> 
> Thanks


 
I get the exact same premium when I do the quote myself, so it's an excellent quote.    The tax relief assumes tax relief at the higher 41% rate.


----------



## PaddyW

IC will cover me in the event,only, of accident or illness preventing me from working is it?


----------



## LDFerguson

PaddyW said:


> IC will cover me in the event,only, of accident or illness preventing me from working is it?


 
Yes, ANY accident or illness that causes you to be unable to do YOUR OWN job for more than 26 weeks.


----------



## demon 90

LDFerguson said:


> Paying a claim for only two years is very poor compared with most Income Protection policies which pay you until you are able to go back to work, or your chosen retirement age.
> 
> How do they define disability? Is it "unable to carry out your own job" or is it something far more restrictive?


----------



## demon 90

RossieGooner said:


> I have just taken out an income protection policy with insurety.
> 
> It pays me 60% of my gross income for up to 2 years if i cant work due to accident, sickness or busniess failure or redundancy (being self emplyed this was needed i thought.)
> 
> insurety will only pay out on redundany for self employed if your business goes completly to the wall, and dept collectors are at your door: what good is that?


----------



## NorthDrum

demon 90 said:


> RossieGooner said:
> 
> 
> 
> I have just taken out an income protection policy with insurety.
> 
> It pays me 60% of my gross income for up to 2 years if i cant work due to accident, sickness or busniess failure or redundancy (being self emplyed this was needed i thought.)
> 
> insurety will only pay out on redundany for self employed if your business goes completly to the wall, and dept collectors are at your door: what good is that?
> 
> 
> 
> 
> Sounds more similar to Mortgage Income replacement then Income Protection.
> 
> With Income protection (mainstream generic referance here) you can get up tp 66.67% of your salary covered (subject to limits of course). The usual policys cover most illnesses and injuries , but dont necessarily have limits on payouts (ie 2 years in your case). This is something to factor in when deciding whats the best conditions in a policy. The redundancy part of this policy is an obvious bonus but like mentioned earlier what happens if you are unable to work for the rest of your life? After two years you have to rely on the state !
> 
> Does your cover include if you are just simply unable to do your job or any job? E.G. if you are a taxi driver and lost your legs, you might not be able to drive a taxi again, but you could get a job in an office etc.
Click to expand...


----------



## pacu

RossieGooner said:


> I have just taken out an income protection policy with insurety.
> 
> It pays me 60% of my gross income for up to 2 years if i cant work due to accident, sickness or busniess failure or redundancy (being self emplyed this was needed i thought.) I also get cash for each night in hospital due to accident and a lump sum for serious injury or death. Heres' the kicker though - if i remain claim free for 12 years i get every single penny i have paid in back.
> 
> I thought it was great cover anyhow, mainly due to the fact that i was paying for incme protection for 6 years with another company but was never going to see my money again unless i had a claim.
> 
> I have the email address and contact details of the bloke i was dealing with if anyone wants them.


----------



## pacu

Sorry to disappoint you on the 12 Year Money Back Guarantee, RossieGooner, but according to the Policy Document, to hand, '25% of the premiums are repayable after you have held you plan, claim free, for 12 years.'
What concerns me more though, Insurety does not cover 'mental illness (including stress).' or accident or sickness 'due to backache or whiplash (unless supported by radiological evidence).' 
If anyone knows of such a policy that covers both, I would be delighted hear about it.


----------



## Jimbobp

Friends first' Income protection policy covers both these (as does Irish life). Depression & back problems are the twon most common reasons people miss work.


----------



## pacu

Thank you Jimbobp, I'll check those two out.


----------



## Ned_ie

allthedoyles said:


> critical illness cover is money down the drain unless you have a serious illness claim. I know a man paid in 9055 euro over 12 years and never claimed . When he went to cash in policy , he was offered 978 euro . Even Ombudsman could not help .
> By telling your insurer about a short term medical problem , will only increase your repayments long term .


 
Critical Illness Cover is an insurance cover - you don't pay your house insurance and at the end of the year ask for a rebate because you didn't claim!!!!


----------



## Marathon Man

allthedoyles said:


> critical illness cover is money down the drain unless you have a serious illness claim.


Very true. Though, as Ned says, it's the same as any insurance policy. You pay to cover the risk.

BUT....if you do have a claim, it pays out. 

...If you don't have a policy in place and you develop an illness covered by one of these policies, you are, unfortunately for you, uninsurable.

I know (at least) three people who had one of these policies. In two cases the policy paid out. In the third case, the person was diagnosed with one of the insurable illnesses 3 months AFTER cancelling the policy!

Be aware that the range of specified illnesses is pretty narrow. Even within the range specified, there are further criteria. For example, Fiends First specify, effectively, that one must be diagnosed with advanced prostate Cancer before they will pay out - bad enough having Cancer, but it's got to be almost 'last chance saloon' before FF'll pay out! 

I'm aware of a case where, even with advanced Cancer, FF had to be threatened with the ombudsman, after requesting FF's 'Final Answer', before they paid out. Even if you're covered, it's not necessarily all plain sailing.


----------



## Jimbobp

I agree, policies wordings vary a lot between insurers. I, for one, would be in favour of standard wordings/cover across the industry.


www.powerinsurances.ie


----------



## EMG

I'd love to see when your 12 years are up will they still offer the money back!!!!


----------

