This month, we’re talking all things personal insurance, and by that we mean life, critical illness and income protection cover.
Most people take out car, phone or contents cover to insure their belongings, but it’s even more important to have something in place to protect your salary.
Maybe you’ve already got one of these policies in place – or all three – but aren’t sure if it’s the right cover for you.
It could be that you’ve been putting off taking it out and really need to sort it, or you might not realise the benefits.
You might also want to know when a payout would be made, if you’re free to spend the proceeds on what you like, and if insurers really do pay out on claims.
We’ll be answering the most commonly asked questions below, but if you’d rather chat to your local Beewise insurance expert, give us a call on 01934 204841 or click here to email.
People often think they’re not eligible for life, critical illness or income protection cover due to their health history, or their family’s health history, so we’ll chat about that too.
And we’ll talk about something we’re asked the most, finding income protection – long-term sick pay cover – for self-employed workers, or those in high-risk jobs.
Read on for more, and if there’s anything we’ve missed, get in touch to ask!
How does personal insurance work?
We’ve got a more in-depth guide to each of the policies on this handy blog post, but here’s a brief outline of their main features.
First up is life insurance, as this is the one most people are familiar with. Life insurance pays out in the event of a death, but there are lots of options depending on the support you need.
It could pay a fixed amount, a sum that would clear your mortgage, a monthly figure to cover your family’s bills, or an ongoing payment for your children until a certain age.
If that sounds like a lot of choices, don’t worry. It’s our job to recommend a policy that both suits you and fits your budget – get in touch here to find out more.
Next is critical illness cover, which pays out on diagnosis of a critical illness. Depending on what level of protection you choose, you could be covered for up to 51 serious conditions.
And finally, income protection covers you in case of an accident, disability or
long-term sickness, paying a monthly salary replacement for as long as you’re unable to work.
The loss of a salary – even just for a few months – would have a huge impact on your household. So, these insurances give peace of mind at an already stressful time.
Is life insurance, critical illness cover and income protection worth it – as in, do they pay out?This is something we get asked a lot, and the short answer is yes!
Sometimes people can be distrustful, thinking an insurer puts loopholes in place to avoid paying out. But, as long as you’re honest when you apply for the policy, this isn’t the case.
We only recommend insurers with outstanding claims records – for example, one paid 99% of all protection claims in 2023 , and another has settled 97.8% of claims since the start of 2019.
Different insurers and policies have different criteria around what they will and won’t pay out for though, which is why we always recommend talking to a Beewise insurance advisor.
With policies like critical illness insurance you can get various levels of cover, so a cheaper policy might not pay out in all circumstances.
But, we’ll recommend the right cover for your needs, making sure you can claim on it in multiple scenarios so you’re not left short.
That way, the only time a policy wouldn’t pay is if you gave wrong information – like claiming to be a non-smoker if you weren’t – or if something like this changed during the policy.
To find out more, email Beewise or call 01934 204841 to chat to your local advisor today.
Can life insurance pay for a funeral?
Yes! There are different ways you can use life insurance to cover funeral costs, from getting a lump sum specifically for that amount, to releasing money from a bigger policy early.
Some insurers specifically offer fast tracked payments which can go straight to a funeral director, making it less stressful for your loved ones.
And they can also consider offering an advanced payment to cover the costs of applying for probate – another potential expense that has to be paid upfront.
If this is important to you, let us know and we’ll make sure we get the right policy in place.
Which insurance is right for me?
Some people may see one as more of a priority, especially if someone close to you has been affected by a critical illness, or been unable to work long-term due to an accident or injury.
But, critical illness cover, income protection and life insurance all have different aims, so are equally important!
Income protection will replace your salary over a long-term basis, so if you couldn’t work for 2 years, 10 years, or were never able to go back, it can keep paying out up until retirement.
This gives real peace of mind as you know that you’d be able to cover your essential monthly expenses, no matter what.
Because critical illness insurance pays out a lump sum however, it doesn’t just replace your salary for as long as needs be, it’ll also fund expenses you might not have considered.
Extra childcare, petrol for hospital trips and having to adapt your home are all costs that can come with a diagnosis. And, your monthly income protection payout might not stretch to this.
The sensible option is to have both policies in place, even if you opt for a lower payout to fit them within your budget. That way, you’ve got financial peace of mind for any scenario.
Lots of people can initially prioritise life insurance, as they want to take care of their family should the worst happen to them.
But, being unable to work long-term due to an accident or illness is much more likely. And the strain of one person being unable to contribute to a household can have a lot more impact.
In fact, life insurance policies generally have lower monthly premiums than critical illness cover and income protection as they’re less likely to be claimed on.
That doesn’t make life insurance any less important, but when protecting your financial needs it’s vital to look at all areas.
I’ve already had an illness or injury, can I still get critical illness cover and income protection?
It’s definitely a possibility! We talk to a lot of people who think they aren’t eligible for cover due to diabetes, Crohn’s disease, heart problems, a previous cancer diagnosis and more.
Depending on the condition you’ve had, when you were first diagnosed, and the treatment you’re currently receiving, there could be an insurer out there willing to help.
For example, someone recovering from a recent illness may not be able to get cover. But, someone with a condition that’s well managed and monitored could.
We deal with both mainstream and specialist insurers who are happy to consider all options, so give us a call on 01934 204841 and we’ll do the research for you.
Cover for those with previous conditions can be more expensive, but if you've had health issues before you’ll understand the value of having that financial security more than anyone.
It’s also possible to get cover for conditions that run in the family, too. One recent example we had involved a client who had a family history of bowel cancer.
While the first insurer our Beewise advisor looked at wanted to exclude this from the policy, they were able to find another who would cover them, just with a slightly higher premium.
Being covered for that was really important to this client, and they were grateful they’d come to us. As insurance specialists, it’s our job to help put those worries to rest.
Do I need life insurance, critical illness cover and income protection to get a mortgage?
The short answer is no, the sensible answer is yes!
Legally you don’t need life insurance, critical illness cover or income protection in place for a mortgage, but for the monthly payments it’s well worth it to give you peace of mind.
Whether you live with a partner or have children too, setting up life insurance to clear your mortgage means that should the worst happen, those left behind don’t have to worry.
Without it, your partner wouldn’t just have to fund the monthly mortgage payments solo, they’d have to consider whether they could afford to remortgage on their own.
And if you weren’t able to work – either short term or long-term – how else would you or your partner pay the bills on your own?
Even if you’re lucky enough to have family that can help, they could only support you financially for so long.
Having insurance is so important, not just for the highest salary earner. Stay-at-home parents have just as much value – think about the cost of full time childcare and running a home!
Plus, you might be surprised at how affordable these policies can be – we think they’re well worth sacrificing a few coffees or the odd lunch out for.
If I’m self-employed, do life insurance, critical illness cover and income protection class as a business expense?
Depending on whether you’re set up as a sole trader or limited company, the monthly premiums can be treated as an allowable expense.
This means you’d be saving money by putting cover in place through your business as opposed to taking a personal policy. So, you’ve got the same level of cover for less cost!
If you’re a shareholder in a company, your company has any loans, or there’s a key person in the business you couldn’t do without, it’s worth looking into separate life policies for this too.
That way, if the worst was to happen to one of the directors, the remaining shareholders would have the ability to buy those shares, or pay off any loans they could be liable for.
If you’re self-employed, the chances are you’re not entitled to any sick pay at all. But, having income protection in place means you’d get a salary replacement as soon as you need it.
There are even options that pay out from day one of sickness so you don’t have to rush back to work, and for higher-risk jobs such as lorry drivers or construction workers.
If you’re self-employed, email Beewise or call 01934 204841 to talk about the options available to you and your business.
Can I change the cover I have in place already?
We get asked this on a regular basis, and not only is the answer yes, we highly recommend it!
Many people have cover in place that was linked to an old mortgage, or taken out a while ago, so they’re not really sure if it’s still suitable.
It’s important to review your life insurance, critical illness cover and income protection on a regular basis, revisiting it when your circumstances change.
This could be when you move, remortgage, have children, change jobs, get a salary increase… Essentially, it’s worth reviewing your cover at the same time as any life updates.
Your local Beewise advisor can do this to make sure it’s still right for your situation. And, even if it is, we can compare it with a whole host of other insurers and potentially save you money.
An insurance review is free of charge and takes no time at all, so why not find out if we can help you today? Give us a call on 01934 204841 or email us to book an appointment.
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To get in touch with your local Beewise advisor, ring our office on 01934 204 841 or email to arrange a call, with evening and weekend appointments available.
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