Question re appropriate income protection/ life insurance

I am trying to understand the ins and outs of income protection for a friend. Age 55, has her own company business, which she could get a sibling to run in the event of her serious illness, so the company income would not be significantly affected, although she would have to significantly increase the salary to her sibling to keep things going. She has heard that income protection policies may not pay out if they think she can still be paid. In effect she would have to give the majority of her salary to her brother to keep the business running. She earns around 60 k. Is income protection the best option or should she get serious illness and short term income protection ? She would feel that 30 k income protection after a deferral period of 3 - 6 months would be enough to keep things ticking over. She is also considering a separate life insurance policy for around 300 k. She has some medical issues, hypertenion and a history of mental illness. Is she likely to get it for a reasonable fee ? Any thoughts on the best route ? .

At 55, she'll only get Income Protection with Aviva but it will be expensive and may have several exclusions for the pre-existing medical conditions.

Hard to say about the life insurance. Depends on the specifics of the medical issues. She should contact an experienced broker with more detail on the specific of the medical history. A broker can then put the enquiry to the underwriters of a number of life insurance companies and get an idea of how she will be treated.

She'd be looking at about €160 a month for income protection of €30,000 to age 65 with a deferred period of 6 months. As Dave said, there will be exclusions for pre existing conditions. It could be a decline though depending on the mental illness. The company can pay the contributions.
There is no issue in her taking out the cover through her company and her still being in receipt of income as long as her total income through the income protection, salary and state disability does not exceed 75% of salary.

Life cover is about €93 per month. She can take out cover through her company but that is limited to 4 times salary. If she pays herself a bonus and her total income is €75,000 or over, I would recommend it paid for through her company. Otherwise, do it personally. Another consideration is doing life of another where the beneficiary of the cover is the owner of the cover and pays the premium. By them being the owner, it avoids probate and is paid out much quicker.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)