Life insurance/critical illness/income protection - help??

[andwhatnow]

Could wise mumsnetters please point me in the right direction??

I am mum to a 15 year old and I live in my own house with a mortgage. I am divorced.

I have been paying life insurance, critical illness cover and income protection for the last year since moving (I took it out with the mortgage knowing that I could perhaps get a better deal soon after and lo and behold, a year has passed!!).

I am now looking around for better deals but have been given conflicting advice. First of all - do I need all of the above? I am a lecturer with a permanent position and have inservice benefits of a pension, and a payout on death of approx £120 000 (which cooincidentally happens to be the amount of my mortgage). In terms of illness, I would get 6 months full pay then 6 months half pay as a basic rule of thumb.

What would you advise?? Please help. My son's father lives close by and also has a mortgaged property. Realistically, if something were to happen to me, he would live with his father.

Thank you.

[Spickle]

Not sure I am much help, but this is my experience:

Critical illness cover will pay out a lump sum if you are diagnosed with one of the illnesses listed in your policy. If you never suffer one of those illnesses then you won't get any benefit from it.

Check with your employer about what happens after the six months half pay has finished. My DH's employer had a long-term sick insurance policy which continued to pay my DH a wage similar to the half-pay until he unfortunately died a year later, but we were not aware of this until the "half-pay" had nearly finished. It certainly was a lifeline to us when we were trying to reduce our outgoings.

Be aware though, that some unscrupulous employers, once they realise you have a serious illness, will try to offload you as, while you are off on sick leave, they will tell you that your job no longer exists and therefore you become a candidate for redundancy. Redundancy payments will be a lot less than in-service death benefits.

I have a life insurance policy which will pay out to my children if I die, which will give them some immediate funds to see them through the following months (when accounts are frozen) until probate is granted.

Maybe consider having mortgage protection to pay the mortgage off if necessary, which could be useful if you die or become ill with an illness not on the critical illness policy.

Hope that helps.

[RosesandRugby]

Im not an expert but I can tell you that the policies I held, upon closer inspection would not have paid out to me if I needed them.

For example, my critical illness policy would pay the equivalent of 6 months full pay followed by 6 months half pay then it would stop which was exactly what my employer would have paid. The policy wording stated they would only pay out if no other policy was in force so if my job paid me this money then the critical illness policy would not pay it to me as well. It had to be 1 or the other.

My income protection, which covered paying my mortgage if I was off work, only covered me if I was made redundant and not if I left a job voluntarily and couldn't find work immediately. However it wouldn't pay out if I received above a certain amount in redundancy as they would deem me able to pay my own mortgage.

I cancelled both of these policies after discussing them with a financial advisor (I did not get any money back from the policies). I recommend you seek independent advice.

I actually put the money from paying for these policies into savings so I still benefit from having money available if I need it.