Protection insurance menus which give customers the opportunity to mix-and-match health and life insurance cover in a single comprehensive policy have been used for over 15 years. Regrettably the initial cheapest mortgage life cover insurance policies did not seem to be very attractive to clients although the idea was right. Administrative savings, a single set of paperwork and direct debit were accepted by both the consumer and the insurer. On the other hand the benefits provided by these options were outweighed by the drawbacks.

The choice of products given by the main pioneers, Scottish Provident, were not competitive.  IFAs investigated leading providers to form protective deals for the clients, which significantly reduced the rates found in protection menus. The insurance companies have now advanced and a large amount of new protection policies have been released which have acquired the support of many mediators.

Standard Life was the first to work out a winning formula when it re-launched it’s Self Assurance menu. They were soon followed by Legal and General, Liverpool Victoria Life, Friends Provident, Skandia Life, Scottish Equitable Protect and others are sure to shadow their lead shortly.

Three key details are found in nearly all protection options. Critical illness insurance cover quotes a number of stated critical conditions for which the insurer will pay out a lump sum. The least expensive option, term assurance, pays out a lump sum if you depart this life within a given period and nothing thereafter. The last one is income insurance, which provides you with a consistent income if long term disability or illness stops you from working. The options may offer you redundancy cover, which is usually limited to one or two years and may also be restricted to the payment of a mortgage. The chief attraction is the flexibility of the insurance products. For example various levels of life insurance cover can be organised for separate component parts, so should you make a claim on one part the others will still remain in force. No more medical information will be needed prior to major living events, like becoming married, having a baby, or moving house. These extra benefits are called ‘Guaranteed Insurability Options’.

Different components of cover may be included following the conclusion of a brief questionnaire and you are still able benefit from the normal policy discounts.

A case of the benefits obtained from a protection option is demonstrated by a young couple who went for Friends Provident’s Protection Choices option for mortgage protection life insurance. They are paying a joint policy of 31 pounds and 7 pence a month for separate critical illnesses and life policies, which have been written on a combined life basis. At the start they have cover of £109,990 which reduces as their 20 year homeowner loan is paid off. Life insurance would be paid out if 1 of them dies and the policy is ended, but the one surviving will still be covered for critical illness cover Life assurance will be maintained for both partner seven if one of them becomes ill and the insurance will pay out on whoever dies first.

If the couple had purchased a standard joint life insurance policy with Friends Provident they will only get a pay out on their 1st claim. Whereas with their Protection Choices insurance policy they are provided with two possible pay outs costing only 7 pounds more. Even if employees are sometimes provided with income protection at work they may also wish to cover their mortgage in the same way. Plus they could want to take out additional critical illnesscover and life cover not linked to their mortgage. Friends Provident’s  protection menu allows them to do so in a cost effective and straightforward way. The new features based products permit you to save money even though you can shop around for individual insurance policies and only save a few pence.

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Andrew Merricks, head of investments at Lancaster-based financial adviser Peel Townsend Financial Services, counsels that it is very shortsighted of people not to have Life Assurance and/or Critical Illness Insurance as he maintains that life has two major threats – either being alive too long and dying too soon.  “Its absolutely essential to have some cover in place – particularly if youve got a young family,” he states. “These days you need to build your own little welfare state because no one else is can do it for you.”

Greg Suttcliffe at Bestdeal says now is the right time to buy such insurances as there are many very cheap premiums about owing to the intense competition for business within the industry. “The price of life insurance has come down – reduced by about forty five per cent in three years. It has never been as cheap,” he adds. “The critical illness industry paid out on 85% of claims in 2007 – up from 79 per cent  the previous year.”
Be aware of what insurance cover you have before you take out more.  Do you have any investment policies or does your company pension fund give you any cover?

The best way to assess how much cover you need is to calculate how much you would need to have the same standard of living over a year and then times it by twenty five years.  The minimum amount needed should pay off any outstanding debt and provide a lump sum for all your dependants.

Making sure you get the best deal – When making a decision on your insurance cover it is very important to read the manual that many insurance companies have of the illnesses and conditions that they deal with. It will list everything and should be clear-cut and easy to grasp.  You will also want to see the documentation of the significant facts of the cover which will contain all benefits and exclusions.

When a person takes on the responsibility of a home loan they are normally advised to take out critical illness insurance cover but should research the market and not just take the first insurance cover suggested.

If you start paying these insurances when you are younger they are significantly cheaper, distinctly different to leaving it until you are older, when insurances goes up quite substantially.

Insurance premiums can also be reduced by giving up smoking.  Alison Hines, manager of protection at AxA Insurance states ” as well as giving a longer and healthier quality of life, giving up smoking can save people a vast amount of money.”

If you stop smoking you can knock as much as a third off life, critical illness cover and income protection insurance premiums because the facts that we now have shows that smoking can trigger serious illness and aggravates any other existing medical conditions. If your circumstances change you may have to alter your policy.

Under no circumstances feel that once you have purchased your policy that you can just continue with your life and forget about it. Always be very mindful of the cover you have and make certain that, should your situation change, or, are about to change your insurance must accommodate these changes.  Clear examples are changing your job, or do you intend to have more children; frequently think about everything that may raise your living costs and will need to to be covered if you are taken ill and cannot work.

Our advice is if you want cheap life cover, go online – that’s where all the cheapest deals will be found.

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