www.iva.co.uk

Critical Illness Cover/Life Insurance Cover

Hi everyone. I am currently in a joint IVA with my husband and am almost to our first anniversary. I am looking to start either a critical illness policy or income protection policy as I am the main earner in our home with 2 small children. Is there any way that if a claim is made that the payout can be paid to my children rather than as a windfall to me. Getting really confused by it all. Seems that you can't have life insurance/critical illness cover as the funds will go into the IVA and my family will be left with nothing. Your expert advice as always will be a life saver!

Hi - it is also a case of whether the expenditure is allowed.

In the event of someone's death the funds would go to their estate and the IVA would have first priority.

If you were getting income from the policy that will depend on your the approach of your particular IVA company.

Find a good broker and write the policy under trust for the benefit of your children. I was told to cancel my critical illness policy but agreed to fund it from my uplift. Good luck.

when I did I&E and already had a policy it was suggested to me that any IP who suggests you cancel an already existing policy as a requirement could potentially find themselves in hot water if for example 2 weeks into the IVA you suddenly found you had grounds to make a claim e.g. cancer and they had given you advice to cancel it, bad advice !

Doesn't help with the original question but thought I would mention it in the event anyone else searches critical illness.

More than one of the firms I checked out said this and my life insurance polices wouldn't be allowed, Mcambridge duffy said they were.

Might be a slightly different story if you're not starting an IVA with one in place already.

It is true that we would never advise anyone to cancel a policy as we are not financial advisers and these policies can be vital. However, if a creditor asks for this at a meeting then it is between them and the client as to whether it is to be cancelled. We would usually fight our clients' corners but sometimes we do not win.

It is true that we would never advise anyone to cancel a policy as we are not financial advisers and these policies can be vital. - See more at: http://www.iva.co.uk/forum/topic.asp?wh ... 147#595630

Not many IVA companies would be that informed to know the difference - only compliment that I given today in anything that I have done:)

In fairness to my IP he didn't agree that I should cancel the policies, it was TIX and they wouldn't move on their decision and they held the majority vote. Anyway, I've fortunately been able to keep them by paying with our share of the uplift.

We had policies in place prior to the iva. The outgoing was never, and has never been questioned. Hadnt considered any payout going to the iva but id rather know got some cover if anything happened and cross bridge when come to it if it woukd need to go into iva. Lets hope we dont in the next 3 years.

font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by abbiesmum2003

We had policies in place prior to the iva. The outgoing was never, and has never been questioned. Hadnt considered any payout going to the iva but id rather know got some cover if anything happened and cross bridge when come to it if it woukd need to go into iva. Lets hope we dont in the next 3 years.

You could always setup a new one that pays into trust for kids/wife etc and then run them in parallel or reduce amount in old one or cancel it, then the worry about that scenario over next 3 years would not be there ? Worth exploring IMHO.

Hi all. I have spoken with a financial advisor who says that any payment from a critical illness policy is for the policy holder only and cannot be paid to a third party (unlike a life insurance) I am now still a bit unsure which route to take either critical illness or income protection. Does anyone have any experience of a critical illness payout and how it was dealt with by your creditors. Really confused which way to go so your advice is a real help.

That is one of the problems with critical illness policies is that they are paid to the policy holder. This can create a windfall but there must be a way to create a trust which would protect it.

Income protection is usually paid monthly so would allow the living expenses to be met [including the IVA payment]. This would not therefore be a windfall as it is only replacing what has been lost.

It's a few years since I worked in Financial Services but I'm sure that there is a way that critical illness can be dealt with under trust. May be a good idea to have a chat with a lawyer if you could get a free initial session.

I think you should speak to another financial advisor.

I just googled critical illness policy pay into trust and this l&g link came up
http://www.legalandgeneral.com/life-cov ... over-faqs/

it says can I pay my life insurance and critical illness policy into trust, answer yes. that might be your solution. A life policy that pays into trust but also pays out on critical illness (though personally I think 2 independant policies are better, if its the only way....).

I am not qualified to give financial advice etc etc

I have jut spoken to my IFA and he says it is possible and he has done this before for people in a similar situation. He said he would be more than happy to help you out if required.

His contact details are:

Stephen Jones
Clear Solutions
http://clearsolutionsifa.co.uk/

I thoroughly recommend his services been a client over 20 years.

I must add, me ending up in an IVA was nothing to do with his advice #128521; it was purely self inflicted !!

Thanks for the info. I did give your guy a call but they're at full capacity at the mo and he said they did very little life cover. I think I'll have to find another ifa to look into it. Anyone else any recommends?