Adrian Garside

The ‘Man from the Pru’ no longer visits customers, he visits IFA’s and he’s just been to see me. Not today, you understand, it’s 7am as I type this – I saw him last week.

They have added ‘healthcare’ to the options on their ‘all in one’ insurance policy. My interest was mild, Healthcare is a pretty complex subject and there are many policies to choose from specialist providers and I wasn’t inclined to think he’d tell me anything that wouldn’t be revealed by running a search on my software.

But he surprised me.

They have the usual options – range of hospitals, range of cover etc and when I am looking at these options, I would put the Pru into competition with the usual providers and they would have to stand on their own two feet.

But they have an addition option that did tweak my interest.

It’s Private Health Insurance that just covers Cancer and Heart attacks. Now, the NHS are very good at Cancer and Heart attacks, from what I gather, but, good as they are, they have budgetry restraints – for instance Herseptin isn’t on the NHS, but is provided on this policy if appropriate – and the hospital experience is better when private, just by the very nature of things.

And this cover can be cheap – I was just running off quotes for a couple (him 40′s, her 30′s)  who wanted Life and Critical Illness Insurance. I added this Cancer and heart attack cover and the additional cost was £28. The cover is cheaper when run side by side with serious illness cover than if it’s stand alone because they cross subsidise the cover.

It seems to me that if you are interesting in Private Health cover, but have always found the premiums daunting, this is an ‘entry level’ product that is worth considering. Talk to your friendly neighbourhood IFA.

There’s a question on one of the trade websites – I think it was ‘Mortgage Introducer’ asking if IFA’s provide a better service than standard mortgage brokers.

Well, I was a mortgage broker, and now I’m an IFA.

Service – hasn’t changed – I still do my best – I offer the same advice, albeit with a better range of products – I still take it personally when a lender messes up, I’m even worse if I do!

Product range – I think this is the difference, and it’s not all to do with the mortgages. I’m a member of alot of mortgage clubs so have a decent range of exclusive deals available to me – some brokers may not have access to so many. Also, some brokers only have access to some products in theory – I know one company that tells their brokers that they can use any lender they like. But they have an approved panel and the broker gets no commission for going off panel. Guess how many times they need to go off panel.

But, for all the related insurances it makes a huge difference. For instance, the other day I quoted Buildings and Contents Insurance for somebody. There was going to be a charge if they used a product away from the lender, so we needed the premium from the lender first – £59pm. I could get it for £43pm elsewhere.

£16pm saving.

And you can see similar savings on all types of insurance between a cheap provider and an expensive one. And, I don’t recommend policies where the cover is compromised. Quite the reverse.

Most people get paid if they are off sick,

Average seems to be about 3 months pay, good is six months and excellent might be something like six months full pay followed by 6 months half pay.

After that you are on your own. Well, not quite on your own, if you qualify, you may get Employment and Support Allowance, although £95 per week doesn’t go as far as it used to. And there are other bits and bobs that may come your way, say, if you are a family and your partner works, you may get tax credits or even carers allowances.

The Government know that 3 out of every 10 of us that work will become disabled before we are 60.

Wow. You’d have thought that would mean an insurance that replaced your wages if you were off sick would be in serious demand wouldn’t you? After all, it’s a fair bet that you’ll claim and the consequences if you don’t have the insurance are…well, pretty close to a life of poverty.

So, why is this insurance not flying off the shelves?

2 Reasons

1. You think it’s going to be expensive.

2. You think you have it in your Accident Sickness and Redundancy cover with the mortgage.

Lets start with number 2 – the accident and sickness in that style of policy only pays out for either 12 or 24 months. Really it should pay out to age 65, which leads us to point 1.

If it has to pay out to age 65 isn’t it going to be crazily expensive?

Well, no, not really.

It would be if you are a lumberjack or a stuntman, but for someone with an office job or a sales job it can be quite cheap. What do I mean bu quite cheap?

Well, it’s not uncommon to quote premiums lower than £20pm.

Obviously it depends on your job, your health and how long your sick pay lasts as well as a few other details, but this is probably the best value insurance policy you can get.

Call press ‘Call back’ and I’ll give you a quote.

I almost always recommend income protection insurance over critical illness insurance.

This is because Critical Illness insurances have a set list of illnesses, whereas Income Protection pays out on any illness that stops you working.

Now, there is a point that if money were no object you’d have both. But, since it is an object, what we have here is what causes the least financial danger.

If you have an illness that stops you working, but isn’t critical – stress for instance – then money will be a problem and income protection solves that.

If you have a critical illness that doesn’t stop you working, then you’ll wish you had critical illness cover – but it won’t be because you are in financial dire straits, it will be becuase everyone wants a huge chunk of money.

LV= have just issued their claims stats for this year – they do both types of insurance and as with other providers they show that Cancer is the biggest payout by far on Critical Illness policies.

For income protection the top four causes of  claims over the last 12 months were mental disorders (29%), musculoskeletal disorders (20%), circulatory system disorders (11%) and cancers (11%).

The 1st 2 are not covered on critical illness policies, the 3rd is a grey area.

The average age of a female income protection claimant was 44 years, with male claimants two years older on average at 46 years. This is older than the critical illness claims stats issued at the beginning of March by Bright Grey, which had males at 42 – that’s interesting.

For income protection, the average payout period was 8 years. And this is why I recommend it – if you need protection, this is the one that can be the most help.

Full story – http://www.dailymail.co.uk/news/article-1254881/Cigarettes-killed-Message-smoker-funeral-hearse.html

Albert Whittamore died from smoking, and now must be applauded for trying to get the message across and also answering the question that everyone asks when they see a hearse “I wonder what happened”

This trend could continue, and then you can imagine ‘one upmanship’ entering the equation – I will be amending my will to include instructions for “died spying for country while jumping across rooftops” to be on the sign in my hearse – I’m not taking my final journey with everyone knowing that I died playing a quick game of patience.

This fits with my oldest sons birth certificate, where I convinced the lady at the registry office that I was a ‘special agent’. Should keep geneologists guessing in years to come.

I am also now amending my divorce story from ‘we gradually drifted apart’ to “she caught me in bed with two women”…

For most IFA’s the 1st thing we worry about for our clients is protecting their incomes against ill health or accident – if they have no income, most other planning we do for the client can fall by the wayside as soon as an illness strikes.

Your reaction, reading this is ‘EXPENSIVE’ and my reply is – surprisingly not.

Lets assume we have a 35 year old male desk worker, who gets 6 months sick pay from work.  He wants to make sure that his income of £36000 carried on until age 65 if he was off sick long term.  How much do you think he’d pay? Well, if he’s in good health now he could  pay less than £30pm. In fact there was a policy for less than £20pm if his job could be described as professional.

£20pm to make sure that if you got stress or some other illness your income is insured. That’s not expensive. Is it?

So, why doesn’t every person have this insurance?

Well, not everyone is a desk worker – lumberjacks would pay more, trawlermen would probably be declined if that program on Sky is anything to go by and lets not talk about Ice Road Truckers.

And not everyone gets 6 months sick pay, if you needed the insurance to kick in after 3 months you’d pay a tad more, although it is even cheaper if you get a whole years sick pay.

The thing that makes it cheap though, is that it pays out with no tax, so I don’t have to insure the full  £36000, I went for half that for the example – that’s £1500pm which, when added to state benefits that I would expect to be about £74pw would roughly match our man’s take home pay.

The practice has been involved in a flurry of claims on critical illness, terminal illness and income protection.

This can be very sad, but it is good to be able to help people in these situations.

Also, from a professional perspective it’s been interesting on two fronts.

Firstly, so far, the claims have all been paid by the insurance companies – this flies in the face of ‘popular opinion’ and is very good news for our customers but also very reassuring for us, it is easy to develop self doubt when offering these products.

Secondly, the thing that I have noticed is that some of the claimants are younger than me – and I’m only 41 – which reminds me how often young people decline to take recommended insurances becuase they feel immortal. I say that without making judgement – I did exactly the same

Separately, I had a visit from the Prudential this week – they have tweaked the small print on their Serious Illness Policy – and now it is a Seriously Good Policy (hmmm, maybe I should be in marketing…). It is like a critical illness policy, but there are illnesses that are serious, but not critical. In fact, I can break this down into numbers.

All the mainstream critical illness policies cover between 30 and 39 illnesses. The serious illness policy covers up to 135.

Examples? – Prostate Cancer – serious, but not critical. Diabetes – serious but not critical (BUPA cover one form of diabetes in their policy, but it’s the rare type)

If this tweaks your interest, give me a call. 01489784022 or e-mail me – adrian@adriangarside.co.uk

Yesterday I had the results of some tests and I don’t have cancer or diabetes, which is a relief of course, although curiously it does mean I either either have ‘something else’ or nothing, both options being quite unsettling.

Anyway, there is nothing like being tested for cancer to focus the mind and my initial thoughts were money based (actually, that’s a lie, but for the benefit of the blog lets pretend they were) and it occurs to me that there is plenty of support and help for people with serious illnesses, but the financial side of things needs to be looked at and probably in quite an unemotional kind of a way.

My objective here is to get into a position where you are feeling in control and making the most of what you have.

The first thing you need is 2 sheets of paper.

On the 1st put everything you have – savings, house,  etc. And everything you owe – credit cards, mortgage loans etc. Just as an idea put the credit limit by the balance of each credit card.

The second sheet is for income and expenditure – your bank statements will help here.

Next make a list of places you have worked and note which ones might have offered you a pension – possible if you worked there for over 2 years. Then make a list of insurance, savings or any other life policies you may have had.  If the insurance or pension company has changed its name or been taken over, the  Association of British Insurers http://www.abi.org.uk/Search/default.asp will tell you the latest name or new owner.

If you have shares, make a list. You can get the prices from a newspaper or the internet.

With pensions, ask who the Nominated Beneficiaries are – the people who will get that pension benefit if you die before taking them. This may need updating especially if you have married or now have children, for example.

Now the biggest questions.

How long have you been given or what are your chances?  Will you be able to continue working? Will you be able to travel or drive a car? Will you need care? Who might be able to help you?

If you have more than two years, then you might as well carry on as normal for as long as possible.   But if you have less than two years to live, it is time to think.  There is nothing sadder than dying thinking “If only”.  But strangely, a short life expectancy may enable you to achieve one or two of your goals, that you might not have bothered about otherwise.

Take another piece of paper, and write some headings: People, Things, Places. You might want to adapt this with headings like: Family, Colleagues, Hobbies, Sports. Now the fun part, and yes I mean you ought to be able to get some enjoyment out of this. What have you always wanted to do? Pretend you have won the Lottery and let your mind run free here and don’t bother about the practicalities. Keep the list handy and a notepad and pencil with you so you can write things down as they pop into your mind. It does not matter how long the list is or how many items are on it.

Once you have done the above exercises you will have:

A financial picture of you.

Your doctors have told how long you have got and what quality of life you can expect for that time.

A list of everything you wanted to achieve.

Achieving some of the goals will need money, but you may have more than you think, which is the real point behind this exercise.

The surprises here can be pensions & life policies. Critical Illness Benefit is where a lump-sum will be paid after the claim paperwork has been done and checked and covers many (but not all) cancers.   Most life insurance policies have Terminal Illness Benefit, This means that if your life expectancy is less than 12 months, they will pay out while you are alive. ( This will depend on what answers your GP gives to the insurance company)   I have a client who asked me to look through her paperwork and we found a policy with this benefit and it paid out this year for her.

Most policies I set up have a Waiver of Premium Benefit and will be kept in force by the insurance company if you are ill for over 6 months without you paying the monthly premiums. This will help your family more than you, but can give you peace of mind and save you the outgoing in the meantime.

Some pensions can be paid out in cash tax-free where life expectancy is a year or less which can seriously improve the quality of life for the short time left.

If it helps, get your adviser involved too.

The important point about the exercises above is that they can make you feel that you are back in control of your life again, and importantly give you the chance and focus to tick off some of those ambitions.