Life & Critical Illness Cover - Questions

Lemlin

Last year I got a mortgage so I need to get life cover. I decided to get life and critical illness cover for 200k (the value of the mortgage) and it is costing €36 a month. The company I got the cover with is Acorn.

This year my partner and I are now looking to get another mortgage for 170k, bringing the total mortgages for the two of us to 370k. We went to my life insurer and they offered to cover the both of us for €123 a month for life and critical illness for 370k.

However, they have since come back and said that, because my OH had a skin rash when she was young and needed laser treatment, they want to up her premium. It is now costing €167 to cover us both for life and critical illness for the 370k. Her doctor says she should not be loaded. We explained this to the agent and my partner's doctor is to fax a letter Monday but he thinks it will make little difference. He also reckons any life insurer will load us now.

I told him €120 a month is the most we can afford and he said that can get us 255k worth of cover for life and critical illness now, instead of the full 370k we were originally getting.

I've a few questions and would appreciate any help:

1. Is what the agent saying true? Can my partner's doctor's letter really make no difference?
2. Some people have said we have the critical illness set far too high at 370k. Do we?
3. Do I definitely need life cover to cover the 370k for the two mortgages? I thought I did but someone said to me that I may not.

eman66

In part response to your first question, and without going into to much personal detail, Acorn ignored two letters from my specialist stating that a condition of mine was no longer evident and that his opinion was that I had recovered.

They loaded me to the extent that I am now paying €127 for 190k life cover only. €167 for life cover of 370k and critical illness is very good in comparison. The critical illness cover is the expensive part.

I believe Acorn are relatively good if you were ever to make a claim.

I have very little respect for insurance companies, for reasons I will not go into here.

unwyse

to claim on a critical illness policy,you will need to be dead for at least a week,with a previously undiagnosed illness, and this will need to be certified by both sets of great grandparents and their parents as well. its an utter rip off and you would be as well without it imho.

Lemlin

unwyse wrote: »

to claim on a critical illness policy,you will need to be dead for at least a week,with a previously undiagnosed illness, and this will need to be certified by both sets of great grandparents and their parents as well. its an utter rip off and you would be as well without it imho.

Is this true? I've heard we have the cover far too high on the critical illness alright.

eman66

Multiply your salary by 5 according to the insurance companies, I would say multiplying by 2 would be sufficient.

They won't just pay on a claim by default. They will try their hardest not to pay.

Lemlin

eman66 wrote: »

Multiply your salary by 5 according to the insurance companies, I would say multiplying by 2 would be sufficient.

They won't just pay on a claim by default. They will try their hardest not to pay.

Is this for the critical illness?

eman66

Yes, critical illness.

eman66

Have you checked out income protection? I don't know much about it, but it might be cheaper or more accessible than critical illness cover.

Pablo Sanchez

unwyse wrote: »

to claim on a critical illness policy,you will need to be dead for at least a week,with a previously undiagnosed illness, and this will need to be certified by both sets of great grandparents and their parents as well. its an utter rip off and you would be as well without it imho.

I presume you mean Alive for a week.
You can claim on a diagnosed illness as long as it was disclosed and you had not been 'excluded' from a claim related to it.
Your Great Great grand parents need to be around to certify what exactly????
Get at least one statment halfway accurate before you say what a rip off is.

Lemlin

Pablo Sanchez wrote: »

I presume you mean Alive for a week.
You can claim on a diagnosed illness as long as it was disclosed and you had not been 'excluded' from a claim related to it.
Your Great Great grand parents need to be around to certify what exactly????
Get at least one statment halfway accurate before you say what a rip off is.

I was thinking of leaving the life cover at 370k and changing the critical illness to 100k. What do people think?

Pablo Sanchez

Lemlin wrote: »

I was thinking of leaving the life cover at 370k and changing the critical illness to 100k. What do people think?

Well it really depends on your own personal situation.

You are only obliged to have the life cover in place as security for your mortgage. The critical illness part can add significantly to the cost of your cover as its far more likely you will claim on it then the life element. In fact most people dont have CI as part of a mortgage protection policy.

If you have 100k CI cover and 375k life cover and you were to contract one of the listed CI's then 100k will be paid out but you would still be left with the burden of the balance of your mortgage to pay even if you were incapable of work for the rest of your life.

If you are looking for the cheapest cover of 375k life and critical illness you should ask for a 'decreasing' policy on a 'Joint' basis with 'accelerated CI'

The Decreasing part means that the level of cover decreases year on year broadly in line with how much you have paid off your mortgage that year.

A joint policy is a 'first death/claim' policy. Ie if one of you die/contract a CI then the full amount is paid out and the the policy cancels itself.

The Accelarated part means that if you have 375k life cover and 100k Ci and you claim on the CI then your life cover stays in place but the amount is reduced to 275k (375-100)

You can never really have too much life cover, if you under insure yourself you might save a few quid now but could spend a lifetime regretting it!

Hope it helps.

Lemlin

Pablo Sanchez wrote: »

Well it really depends on your own personal situation.

You are only obliged to have the life cover in place as security for your mortgage. The critical illness part can add significantly to the cost of your cover as its far more likely you will claim on it then the life element. In fact most people dont have CI as part of a mortgage protection policy.

If you have 100k CI cover and 375k life cover and you were to contract one of the listed CI's then 100k will be paid out but you would still be left with the burden of the balance of your mortgage to pay even if you were incapable of work for the rest of your life.

If you are looking for the cheapest cover of 375k life and critical illness you should ask for a 'decreasing' policy on a 'Joint' basis with 'accelerated CI'

The Decreasing part means that the level of cover decreases year on year broadly in line with how much you have paid off your mortgage that year.

A joint policy is a 'first death/claim' policy. Ie if one of you die/contract a CI then the full amount is paid out and the the policy cancels itself.

The Accelarated part means that if you have 375k life cover and 100k Ci and you claim on the CI then your life cover stays in place but the amount is reduced to 275k (375-100)

You can never really have too much life cover, if you under insure yourself you might save a few quid now but could spend a lifetime regretting it!

Hope it helps.

I've been told though that you practically have to die before they'll pay out on critical illness cover so would we not be benefitting from the life if one of us die anyway?

Also, what happens with the cover if one of us die from a critical illness? Would we get the 100k critical illness or the 370k life?

Pablo Sanchez

Lemlin wrote: »

I've been told though that you practically have to die before they'll pay out on critical illness cover so would we not be benefitting from the life if one of us die anyway?

Also, what happens with the cover if one of us die from a critical illness? Would we get the 100k critical illness or the 370k life?

Well by its very nature the illnesses you have to get are serious (critical- the hint is in the name:D). Each life company will have a different list of the illnesses and how serious you must have contracted them eg a heart attack is normally covered but how serious the heart attack must be will vary. For you to be able to claim you must have one of the specified illnesses on your policy. Each life company is obliged to provide you with a list of definitions in advance of taking out the policy on request.

Its not enough that you are really sick for one reason or another, it MUST be covered specifically by the policy.

If you have taken out CI in conjunction with life cover it will be either Accelarated or Double cover.

For example: 100k life and 100k Ci cover, if you claim on the ci you will receive 100k and then the policy ends, ie the payment is 'accelarated'. So if you die a year later you receive nothing as your policy ended when you received your ci payment.

If you have a 'double cover' policy (more expensive) eg 100k life and 100k ci, this means you can claim on your ci and receive 100k. If a year later you were to die (from the ci or from being hit by a bus) then they will pay out on the 100k life cover as well.

A lot of people who take cover dont know what exactly they are covered for but as you can see in the above examples it can make a world of difference.

Drumpot

Lemlin wrote: »

I've been told though that you practically have to die before they'll pay out on critical illness cover so would we not be benefitting from the life if one of us die anyway?

Also, what happens with the cover if one of us die from a critical illness? Would we get the 100k critical illness or the 370k life?

That is incorrect.

As Pablo Sanchez has put perfectly, the critical Illness element is only if you get a critical Illness outlined in the terms and conditions of the policy.

I had a client there who had a stroke and the company tried to decline the critical Illness payment on the grounds that the client was no worse off after the Illness then they were before it (ie. that the stroke hadnt affected their living standards).

We Basically said that the specialist confirmed that the clients life had changed and said we would goto the ombudsman if they didnt pay up. Of course they paid up.

The thing to make sure is that you read the terms and conditions of a contract through. If you have a genuine case when a claim is being made, the threat of the ombudsman will force an insurance company to pay. If you have a legitimate claim, its extremely difficult for the insurance company not to pay (once you or your advisor keep on top of it).

Claims made:
€370 life, €100 Crit ill

Accelerated: You will have €270k life remaining after crit illness claim
Standalone Crit: You will still have €370k Life Cover after Crit Illness Claim

broker2008

A broker would "broke" this cover for you, just because one insurer rates your partner doesn't mean another would. Also there might be no rating if you were to drop the "specified illness" portion of the policy - this is the new name for ctircial/serious illness. ALs different insurers cover different illnesses.