plonkee money an english-er's thoughts on personal finance

May 9, 2008

could you afford to lose your income?

Filed under: insurance — Tags: , — plonkee @ 12:00 pm

Insurance is a pretty boring topic, and insurance salesmen are the butt of many jokes. Like many boring things though, insurance is eminently sensible as long as you do it right.

I’ve been reminded lately about the importance of insurance, as I’m suffering a little with my left hand/arm/wrist (I’m a leftie). It’s making it uncomfortable to type, and of course typing is what I do practically all day both here, and in my day job.Although I know that my discomfort is caused by a specific event, a chronic condition like RSI would have a very detrimental effect on my ability to earn an income.

For most people in the pre-retirement stage of their lives, losing the ability to earn is both financially damaging and more likely than you might think. It’s not often self-insurable (if you don’t need to work for money, then you are self-insured, otherwise you are not), but you can and should consider taking out both short and long term disability insurance, also known as income protection insurance to cover you against such an unfortunate event. You might, however, not need to pay for it yourself.

My employer has just introduced a new benefit, which is Group Income Protection that pays out 50% of pay (minus any other income received) after 6 months of sick leave – during those 6 months you are still employed on full pay. I’ve already got a income protection plans in place, and now I’m not sure whether to cancel. I suspect that having two policies won’t net me any more money, but it’s possible that one could have less stringent requirements than the other.

The question is, should I cancel my own policy, and just rely on my employer’s policy? Or should I keep paying out £26 a month, for my own cover?

Image by openDemocracy

May 1, 2008

remember to shop around for life insurance

Filed under: insurance,Uncategorized — Tags: , , , — plonkee @ 12:00 pm

Did you know that if you’re a single man (as in unmarried / not in a civil partnership) you will typically be asked to take an HIV test if you wish to insure your own life for more than £300k?

For all women and married men, the relevant figure rises to £1m. As no data currently exists for men in civil partnerships (they haven’t been around long enough), some insurers will treat them as single men, and others as married – I’m not sure whether this does, or should contravene the anti-discrimination laws that exist in the UK.

Interesting, don’t you think?

As a relatively young, and healthy person, I sometimes forget that insurance is based on risk, and for life insurance, that risk increases if you are more likely to get sick. And if you are HIV positive, you are more likely to get sick (although the risk can normally be controlled by medication at the right stage). But similarly, if you’re older, you are more likely to get sick. Or if you have an *interesting* medical history.

Life insurance is a relatively straightforward product though. It’s pretty clear cut when someone is dead (as in, there’s a death certificate) and all that happens then is that the sum assured is paid out. This means that life insurance is a easy to shop around on. Now, this is important if, like me, there’s nothing particularly special about you but it’s even more so, if you have any (perceived) risk factors.

So, if you’re thinking about taking out life insurance, shop around. Don’t attempt to defraud insurers by neglecting to mention relevant information if asked, but also, if you think that a certain requirement is too onerous (like taking, and disclosing the results of, an HIV or Hepatitis test), it’s perfectly possible that another company won’t have it.

Image by Jan the manson

August 23, 2007

yet another post about insurance

Filed under: insurance — plonkee @ 12:00 pm

So I was talking to my fellow m-network members about insurance and I explained my foolproof method for determining whether you need a certain type of insurance. The key thing is not just how likely the bad thing is to happen, but the impact that it will have.

Its not the risk of dying that’s the variable as to whether you should have life insurance, its the risk x outcome that you need to consider.

e.g. the risk of me dying is negligible, the (financial) effects of me dying are negligible
negligible x negligible = low so don’t bother with life insurance plonkee


the risk of me become disabled is low, the (financial) effects of me becoming disables are catastrophic
low x catastrophic = high so get disability insurance plonkee

So there you have it. The perfect way to decide whether you need insurance.

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