CriticaI lllness Cover

Just been talking to my next door neighbour. He's self employed, works from home, no employees. He's convinced that his family history and lifestyle mean that he's likely to suffer some sort of critical illness in the next 25 years, (probably a heart attack) so he's just taken out critical illness insurance to go with the life cover he already has, but asked me what the alternatives were. Obviously he could invest the premiums instead, but if he has a heart attack next year, that won't amount to much. On the other hand, he doesn't want to pay the premiums for a number of years, then run the risk that his income drops and he can't afford the premiums any more. If he then gets a critical illness, he'll have effectively wasted all the premiums he has paid, and got nothing for it. It looks like the policy will be cancelled even if he just misses a direct debit on the premium payment

It looks like he's envisaging some kind of illness that obviously isn't fatal, but which might leave him able to continue work after a while (a heart attack is the example he gave), effectively treating the policy as a pension. Is there an alternative that provides better options if he does suffer a loss of income that doesn't mean his entire premium payment history would be worthless?

Brian

Reply to
bigbrian
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If he's that concerned why doesn't he change his lifestyle rather than think about insurance premiums? Even if he isn't doing anything personally reckless (ie he's just stressed from his employment), surely a change of lifestyle to save his life is preferable to planning to factor in impending illness and insurance premiums. That's just absurd.

Reply to
<nospam

Maybe he likes his lifestyle too much. Asking him to change it is like asking Holmes to give up beer, or Blair to stand down.

Seriously, though, is it not the case that CI is designed to cover only temporary losses of income, and is *not* the equivalent of a permanent disability pension?

Reply to
Ronald Raygun

Is there an alternative that provides better options if

Yes, he could start a whole of life policy and the premiums would build up a fund which could be repaid to him if he stopped the policy at some future date. However, as an analogy, would you pay extra premiums on your car insurance just so that you could get money back at some time even if you didn't make a claim?

In the case of the life policy, the increased premiums would probably do better in a unit trust or something. Life funds are taxed and not always ideal for using as savings plans.

Rob Graham

Reply to
Rob graham

When I looked into it, it paid out a fixed sum of your choosing if you were diagnosed as having one of about 30 predetermined conditions, (the fixed sum obviously determining the amount of the premium). I didn't matter whether you then went back to work. I assume this is what he's talking about.

Reply to
bigbrian

I think the greater concern is hereditary rather than lifestyle. He doesn't smoke, doesn't drink to excess AFAIK and isn't particularly obese.

Reply to
bigbrian

But the whole life policy wouldn't have accumulated to anything if he had a non-fatal heart attack next month, for example, would they? Whereas the CI policy would pay out the fixed sum

Reply to
bigbrian

I'm talking about a whole of life policy which includes CI. This would pay out the fixed sum.

Rob

Reply to
Rob graham

In message , snipped-for-privacy@nospam.com writes

How will that effect anything he has inherited from his parents?

Reply to
john boyle

In message , Ronald Raygun writes

No. CI cover pays a single lump sum if you are diagnosed of suffering from a Critical Illness and dont die from it within a specified time.

Yes, you are right.

Reply to
john boyle

In message , bigbrian writes

Yes. The expression 'whole of life' can be arranged as 'whole of life paying out on death or prior critical illness'

So would a basic 'whole of life' policy.

Reply to
john boyle

Is that a uk finance pun?

Either way, the combination of lifestyle AND hereditary problems is clearly more likely to end in illness than just hereditary problems alone. I still think a change of lifestyle is more preferable and more pressing an issue than to faff around factor in becoming ill and working out an insurance policy strategy in the meantime.

However, I can also see that the best thing is to do is both - change lifestyle and plan for the worst whilst hoping for the best too. That way you can't expect any better result.

Reply to
<nospam

I think I must have gotten CI confused with ASU.

Reply to
Ronald Raygun

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