Whole of Life and Serious Illness Cover

N

noreen begley

Registered User
Messages
4
Hi,

In April 2001 my husband and I took out a whole of life double payout Canada Life Protection Options Life Insurance plan at a premium of 84.00 monthly.

First Life Second Life

Sum Assured: 96,500
DITTO
Serious Illness: 50,790

Childrens Serious Illness: 21,000

After the 11th year review we are now paying 250.00 per month with a current surrender value of 450.00.

Present Benefits: 174,000 each Life Cover
92,000 each Serious Illness



As I am afraid this premium will not be sustainable in the long term I would appreciate any cheaper suggestions. Also I have been hearing very bad views on Serious Illness cover in the sense that the condition would have to be terminal before payout. Is this true?

We are in our mid fifties with two children in their twenties and one a student.

Any ideas would be appreciated as I am not very au fait with all this.

Also we do not have a mortgage.
 
Hi Noreen

What you have is a whole of life policy. These policies are set up in two parts; savings plan and protection.

Your premium is paid into the savings plan and invested into a With Profits or maybe a Managed fund, something that is supposed to grow. And sometimes is does grow and there is more money there than expected. But two things always happens...

...there is a crash in the market and those actuarial assumptions that you fund will grow by 6% every month doesn't happen.

And you get older. The premium under these contracts are not fixed and is reviewed usually every 5 years. Each time your contract is reviewed, you are statically more likely to die, so the cost of insuring you is more expensive. If there is not enough money in the savings part of the policy, they have to increase the premium to maintain the same level of cover.


I have run a quick quote for you based on two 55 year old non smokers. Cover of €96,500 life cover and €50,790 specified illness. If you claim under specified illness, that payout will be deducted from the life cover i.e. €50,790 paid out in specified illness and €45,710 left over for life cover. The term is 10 years but you have the option of extending it if you wish without any further underwriting. The cost is €183 per month.

And no, it is not true that you have to have a terminal illness for a payout under specified illness cover. There is a clearly defined list of illnesses covered under each contract. If you get one, there's a payout.

Steven
www.bluewaterfp.ie
 
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