Mortgaqe/income protection insurance

Discussion in 'Finance, Property, Law' started by Enigma266, Sep 8, 2009.

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  1. Insurance companies have a nasty habit of trying anything to get out of paying on any claim and I just wonder whether this is really worth the paper its written on. Anyone had any experience of this?
  2. MPPI is designed to make a payment to cover the cost of your mortgage & associated costs if you are forced to stop work through sickness or redundancy. It will normally pay for a maximum of 2 years.

    Income protection insurance covers against being unable to work due to sickness, and potential could pay out for a long time. ( re: start 30 year policy when age 30, fall ill 2 years later, policy will pay for 28 years ).

    There are loads of variations on each type of policy for the amounts, how quickly they kick in after the event etc so its important if you compare products to check they have the same benefits.

    For illness related policies, they will want regular proof that the condition is still affecting you, for redundancy based covers they will want plenty of evidence you are applying for jobs and not sitting at home.

    Bear in mind though if are still serving you will find this sort of cover difficult/impossible to get.
  3. Grownup_Rafbrat

    Grownup_Rafbrat LE Book Reviewer Good Egg (charities)

    In my own case I don't use Mortgage Protection insurance as it's largely a con, imho, with so much small print you can never claim (based on bad experiences of work colleagues). I'd rely on a redundancy lump sum and taking on any job going to get through being laid off, and a rather nice 3x salary lump sum 'Death in Service Benefit' will see it cleared if I die.

    Critical Illness insurance is another matter, as it's more likely I'll get cancer, heart disease or some other disabling thing which will stop me working. I have a policy which pays out a lump sum on diagnosis, and the lump sum, and therefore the premiums, are on a downward-sliding scale, meaning as time goes by and the mortgage is smaller, I pay less and it pays out less.

    Self-employed people might need also to consider 'key man' insurance, so if they fall ill they can pay someone else to do the job they're unable to do. My experience of that is very out-of-date though.

    My advice is find a trustworthy Independent Financial Advisor. This is not easy, and 'word of mouth' is probably the best way to find one. (I've been burned twice on this, so I know it's not easy!)
  4. I looked at Critical Illness Cover (CIC) - I thought it was a con, the policy being pushed at me involved getting a terrible diagnosis, after which you have to survive for some minimum amount of time before they pay out some sum (£50K on the policy i looked at). Note that if you die within the time specified, they expect your life insurance to pay out and you get £0 from CIC.

    The biggest insult was the premium, something like £20 a month (i'm young, healthy & don't smoke). I read the small print and found my advisor would net £400 for selling me the policy.

    Essentially it's like spending £20 a month on a lottery where you 'win' a relatively modest amount if you get cancer... i'd rather spend £20 a month on the lotto and maybe win big, cancer or no.

    As for MMPI, I concur that Personal Health Insurance (PHI - or Income protection insurance above) seemed much better. Something like £12 a month for index linked cover for sickness for the rest of your life. Rather than a similar amount for MMPI for a paltry 12 months cover.

    Insurance is a minefield. Best advice I ever got was to try to keep enough money in savings. Try to save 1 years outgoings, that way you are your own insurer.
  5. Well I have to say TB, that is the way I am thinking. My IFA doesnt rate mortgage protection but I just wondered whether anyone had had experience of claims. I know someone who had CIC and when his wife was diagnosed with terminal cancer, he had a right old time trying to get them to pay up. If he hadnt photocopied all paperwork then they wouldnt have paid out. It doesnt help that I am put together with metal and so any insurance company will try and worm their way out of paying anyway. I have private medical insurance as part of my employment package so I think I will just stick with this and my savings. I know that if serving, life assurance is a nightmare, not least because of the definition of "war". There were so many get out clauses it was scary!
  6. The_Duke

    The_Duke LE Moderator

    Ok, here we go:

    MPPI can be very good, or very bad - depending on the insurer, product and price. There has been a huge backlash against lenders selling whole of loan period MPPI with the whole premium paid up front by being added to the cost of the loan the MPPI protects. You get charged a large amount of money up front, and then pay interest on it!

    The "relying on redundancy payment" option only works if your employment supports a decent redundancy payment. If you ahve been working there for a long time, you will be entitled to a reasonable payout but if your firm goes bust, expect no more than the standard minimum legal requirement, which will not last you long at all. If you have only joined relatively recently, you will get very little (or even nothing).

    The accident/illness element has a few key exclusions which you need to be aware of. Typically, these are a back injury exclusion, and one for mental/nervous/stress disorders. They are excluded because they are the most common causes of fraudulent claims. It is very hard to prove/disprove these conditions exist, and are serious enough to prevent you working, and are therefore the skive of choice for those going long term sick. If you are prone to either of these, MPPI may not really be worthwhile for you as it is unlikely to respond.

    Critical illness cover is similar, and you get what you pay for. The more expensive it is, the more it tends to cover. They may on the surface all appear to cover cancer, for example, but the specific wording may limit it to only certain cancers, or certain levels of treatment etc. The small print is key.

    As a general point on insurance, the ombudsman that oversees insurance complaints will always support the buyer in cases where there is any element of doubt or confusion over a claim. If you are not happy with a claim, always follow the complaints procedure shown on the policy which will eventually escalate to the FOS if not resolved before then. If the policy should pay, or could be interpreted as having to pay, they will force the insurer to do so. Most complaints arise from a lack of understanding on what they person has bought. The insurance policy does not respond to what you think it does, it only responds to what it is required to do under the contract terms. Always, always, read the policy as soon as you buy it, and make sure it covers what you need. If it doesn't, return it under the terms of the "cooling off" period.
  7. Sixty

    Sixty LE Moderator Book Reviewer
    1. ARRSE Cyclists and Triathletes

    To add to what The_Duke said (and he's right, by the way), many moons ago I worked in the life assurance side of my company and never, and I do mean never, came across any example of 'companies trying anything to get out of paying'.

    Some policies will cover only very specific critical or terminal conditions, there may have been key medical information withheld by the life assured (no full disclosure) or a misunderstanding with what they've actually bought but looking for any sub-clause to get out of paying?

    Never saw it.
  8. I took out a policy with Canada Life in 1997. When I became ill in 2004 the c unts tried every trick they could to avoid paying out, from plagueing me with paperwork, to telling me that because "there was evidence that I was once a smoker I had contravened the agreement with them". This last was bullshit as the terms of the insurance were that I should not have smoked in the previous 3 years, which I hadnt. The reference in my medical record to smoking had been from 1976. It was very difficult to fight them as I was ill at the time and as I was not working, had no money to get a lawyer. The bastards knew this very well. After 3 years of fighting them and, eventualy, a well written letter from my daughter (who had just graduated with a Masters in law from Canterbury) they refunded all my premiums - a cheaper option for them than honouring the contract. my advice is to be very carefull and in particular, have nothing to do with CANADA LIFE.
  9. The thing to remember with all of this stuff is it is optional - you don't have to have any of it.

    If you are happy that you don't think you need to have cover and would rather spend the money on beer tokens then good luck to you.

    If however, you want the security of knowing you have sufficient cover in place should you be unlucky enough to lose your job/get a critical illness/die then take a long hard look at whats out there.

    I'm an IFA myself ( and no,I'm not touting for business ) and what I am always at pains to explain is there is a huge difference between going to see someone who just wants to sell you a policy, and a proper IFA who listens to your circumstances, gives you advice, and then tries to find a suitable product to meet your needs.

    For every example you can provide of someone who thinks they were 'screwed over' by insurers I can give you an example of how it really benefitted someone else. In most cases the problem arises where the original adviser/seller of the product did not explain it properly OR the insured never bothered to read the product details.

    As The Duke says above, if you have a genuine complaint follow it through with the company first and if not satisfied take it to the FOS.
  10. Sounds like a sales pitch to me.
  11. Well something tells me the exclusions within my policy would be quite significant. :lol:

    Oh and in relation to companies not paying out, the guy in my example was told that his wife had signed the declaration stating that she was well after diagnosis of terminal cancer. It was only because he had photocopied the declaration himself and so could prove that the date it had been signed was before date of diagnosis, that the company actually paid out. Had he not done that then they would have refused to pay out. When you are fighting for your life you really dont want to have to fight an insurance company aswell.
  12. Some people have had the shit end of the stick with regards to insurance claims, and thats very unfortunate, but I think it's fair point to say that the experiences of a few shouldn't be taken as representative of an industry.

    I have never tried to chase work on here ( and never will ) but if someone posts a query on a subject I am experienced with am I going to sit on my bloody hands?
  13. here's my bit on critical illness cover: it pays out only if you suffer from a highly specific illness or injury.

    For example, let's say you've got CIC, you're at work, a random forklift driver drops a pallet of lovely new body armour on your hand, crushing it beyond repair. What you should have done is put your other hand down as well - CIC often covers you only for loss of 2 limbs, not 1! And if somenoe pokes your eye out with a s**** stick, make sure they do the other one as well otherwise you won't get a payout!

    Income Protection (think of it in terms of income replacement) , however, covers you if you have a cold or anything else that incapacitates you. (especially us blokes).

    Personally, I don't bother with CIC, but have IPI (which, incidentally, paid out 65% of gross salary for my better half last year for 6 months due to bereavement reaction - we lost identical twin girls @ 22wks ;0(

    Serving soldiers can sometimes get IPI, but with the usual war exclusions.

  14. The_Duke

    The_Duke LE Moderator


    You are a bit off the mark there. Loss of limbs/eyes etc is usually covered under a personal accident policy (the "accident" bit being the key factor) whereas critical illness insurance covers, yup ....critical illnesses.

    These include (but are not limited to) Cancer, kidney failure, liver failure, stroke, heart conditions, MS etc, etc, etc.

    Income protection usually has a minimum 30 day waiting period before the policy responds, so it would have to be one hell of a cold.
  15. For another opinion,

    I was made redundant last November and mortgage and card were through HSBC and the insurance administered by Norwich Union and all the way through the claim were great (except for cocking up last payment when I was going back into work in May as it was a partial month)

    Forms straightforward, my ex employer had shut the doors so they took redundancy letter as proof of claim, just had to do a monthly AB1 form through job centre to keep claim ongoing.

    On the other hand Halifax who I had a second card with are still trying to get their arrse into gear 10 months later,

    it does seem to be, like most things a massively different market dependent on who your insurance provider is.