Life Life Insurance - is serious illness cover necessary?

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legoland

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Looking at all bills atm. We have live cover with serious illness cover but this costs us €203/month. Am I right in saying the SIC only pays out on the predefined list of illnesses and that after you stay alive for a defined period after diagnosis ie 14 days. It also only pays out once so would we be better off with Income protection and a basic life insurance policy?
All advice much appreciated. Were both in our ealy 40's
 
Legoland you need to review the policy document for terms and conditions as this will answer the 1st part of your query. Income protection will also have exclusions, terms and conditions attached ( as does life cover) ie term cover for a particular length of time and so on. If you have mortgage protection, this usually includes life cover up to a pre-defined amt, (normally the balance of the mortgage or a specified amt that is usually higher than the mortgage). You might consider going to a life broker to check these out. There are brokers who earn commission or brokers where fees are paid by you. The purported advantage of the 2nd type is that they will not be influenced by commission considerations and therefore may offer more "independent" type of advice to you both.
 
The policy could be (1) accelerated - where payout would occur on the earlier of a serious illness or death. In the event of a serious illness payout, the amount of the remaining life cover is usually decreased by the payout or to nil if the same or (2) double payout, where there would be a payout on the specified illness portion of the policy plus a further payout on death.

There is merit in having mortgage protection, life insurance, specified serious illness cover, income protection and healthinsurance. All serve different purposes. If the policy is not assigned, you could reduce on a pro rata basis.
 
The more I think about it Legoland, the more I would be inclined to recommend professional advice. The potential financial impact and the high costs of these types of insurances/assurances make choosing the right cover that suits your needs & circumstances all the more important. When I worked in Insurance a few yrs back I often used to laugh that people were either over or under insured - few ever got the balance right!

Perhaps a call to the regulatory body like the Insurance federation might point you in the right direction, or even check out the financial regulators site for more info.
 
Specified Illness cover will only pay out on one claim from the list of specified illnesses. If there is two people covered on the policy then there could be one payout per person. As mentioned earlier if the policy is on an accelerated basis, then the specified illness payout will reduce the life cover amount, if its on a standalone basis then a specified illness payout will not reduce the life cover.

There is a number of plus points to income protection cover;
- it attracts tax relief
- it can cover you to retirement age
- it covers more conditions that would keep you out of work long term

Both types of cover have upsides and downsides, Income protection is probably a little more comprehensive in the overall scheme of things but its not available past retirement age and offers an income until you return to work rather than a lump sum payment. Therefore if you are out of work for a long period it would be superior to specified illness but if you got a quickly treatable non life threatening specified illness then the specified illness cover may pay out more depending on the level of cover you have.

I agree that you should talk to someone about this professionally. I have seen many people cut back on their specified illness cover recently due to budgeting issues but there is long term consequences to this as if they decide to get this type of cover again in a few years when they can better afford it, they will find that the price has increased due to the rates being age related.

You should talk to someone that is independent, not a financial institution adviser as they will only be interested in selling you their product.



www.CheaperLifeAssurance.ie
 
Just to remember that while income protection premiums attracts tax relief, the benefit is taxable. Serious Illness is tax free.

Patrick
 
If looking at the bills you find the €2436 pa no longer affordable you could subject to policy terms and conditions (a) reduce the level of benefits (b) remove the serious illness benefit. The cover you should have at the moment (if any) should match your current responsibilities to those who would benefit in the event of a claim and not the responsibilities you had when you took out the policy. Don't waste your hard earned money on products that are surplus to requirements.
 
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