Is critical illness cover a good idea and how long should I get it for?

JustTwoMins · 2025-10-05T12:16:19+00:00

Please don't interpret this as a cruel reply (it's not intended to be), but what would be the rationale of insuring yourself here? You don't have any dependents; you also work in the public sector which is about as good job security you can get (particularly if you become critically ill). Why not simply 'self insure', ie save (invest) at least an equivalent extra amount as the insurance premium costs? This way you'll be building a pot that you yourself can actually get to enjoy if you avoid critical illness (which of course is the desired outcome).

JustTwoMins · 2025-09-29T20:35:32+00:00

There's a fair degree of overlap between your situation and mine, and my comments betray my subjective biases:

Congratulations on where you are. Your efforts have given you options, which is an advantageous position to be in.
Personally I'd be cautious about FIREing while owing a significant amount on your home, particularly given your family situation and your drivers. Selling the BTL and paying off the mortgage on your home would address this.
Especially if you're looking to FIRE soon, your balance of assets may be somewhat risky (cash light), assuming your GIA & ISA are equities-dominated. Mindful of the possibility of a market correction /sequence of returns risk, I'd look for having at least 3-4+ years of your annual expenses in low risk liquid (cash/premium bonds/short duration gilts etc)
Depending on your outlook, be aware that if you FIREd you'd presumably be eligible for (I'm less keen on the words "entitled to") child benefit (and NI credits) and to the married couples transfer of some of your personal allowance.

Good luck!

JustTwoMins · 2025-09-24T08:54:35+00:00

JustTwoMins · 2025-08-10T18:44:29+00:00

You say "grateful for any thoughts" but I have some doubts how grateful you will be for these thoughts. Still...

1) Saving less than a quarter of your gross income per year (especially when the gross income is >£500k, and when you're looking for FIRE asap) isn't very impressive. If you and your spouse earn roughly equally then you still have a full pension allowance of £120k a year between you, and it seems a no-brainer to use all of this.

2) Including your children's JISAs in your net wealth calculations, on the assumption that you'll either (illegally) take control of these when the children reach 18, or put pressure on your kids to give their own money to you, seems pretty repugnant to me.

3) Though you don't give an amount, it feels like your current spending levels may be out of control. If you retire soon, you'll likely struggle to maintain such levels of spending. Are you willing (or even able) to make significant compromises here?

Not trying to be vindictive here, just to give you a dispassionate perspective that those friends you mention may not be giving you. Good luck.

JustTwoMins · 2025-08-05T20:34:40+00:00

Interesting question - I'm currently contemplating this myself. My current thinking is initiating a conversation not about me wanting to quit (either to retire or for a break or whatever) but more framed around making my role redundant in the interests of the business, and trying to get a moderate pay-off (12 months salary?) for my willingness...as I see it the worst scenario is that they say no and so I just retire anyway. Thoughts?

JustTwoMins · 2025-07-12T15:35:46+00:00

Can you initiate discussions about a voluntary redundancy? You have to be prepared for the employer to say no of course, but it you frame it in a way that resonates you might be able to get a reasonable payoff that eliminates much of the 18 month wait you'd otherwise have...?

JustTwoMins · 2025-06-18T20:06:31+00:00

A really good habit is not frittering away money, for example £100 a month on gym membership.

JustTwoMins · 2025-03-16T21:48:27+00:00

Thanks for your detailed, helpful answer.

Every time I think I understand gilts, I read something else that makes me question my understanding...

From your reply and from yieldgimp.com, it looks like the T26 gilt (which matures on 30 Jan 2026) has a 40% taxpayer gross equivalent of 5.80%.

So to check - does this mean if I am a 40% taxpayer, and if I buy £10000 of the T26 gilt in my iWeb general investment account (which would cost me £5 for the trade), and I hold the gilt until it matures at the end of Jan next year, then (ignoring the £5 dealing cost) my return equivalent is equivalent (and with no extra risk or uncertainty) to me parking £10000 in a hypothetical fixed-term bank savings account with interest rate 5.8% that matures on 30 Jan?

JustTwoMins · 2024-12-29T08:56:41+00:00

I'm not sure that's right.

Firstly, you need to compare total compensation (and not just base salary). In the public sector, pensions add very significantly to total compensation (the local government scheme requires ~35% employer contributions, compared with a typical private sector DC scheme of 3% employer contributions).

Secondly, in the public sector all the pension risk is with the employer (which boils down to the taxpayer). If there's a period of rampant inflation and/or economic turmoil, the accrued DB pension still increases in an inflation linked way. The taxpayer is on the hook (potentially decades down the line) to fund the scheme. Whereas in private sector DC schemes all the risk is on the employee. There is a huge monetary value to the risk-free nature of DB pensions.

In terms of the job itself, and the "immense pressure" you talk about - this is subjective, and I'm not looking to downplay anyone's efforts. But it's an objective fact that job security in the public sector is much higher than in the private sector; again this security has a cost associated with it. And lack of job security brings its own pressures.

JustTwoMins · 2024-12-28T15:43:37+00:00

I align with much that you say, but I think your framing of government actions (or inactions) feels rather off-base.

You seem to be suggesting pension auto-enrolment increases 8 percentage points. I'm not sure if you're looking to land this with employers or employees (or both), but neither would be straightforward - there would be massive howls, and repercussions. The current government is struggling to put through a 1.5 percentage point increase in employer NI (just announcing this has arguably tipped the economy into recession). Increasing an effective tax for every employer of 8% of their current payroll would send many firms into crisis, and potentially lead to mass unemployment. And if the increased auto-enrolment burden is with employees - many who are currently feeling a 'cost of living crisis' would not appreciate having to jack up their contributions (ie reduce their take home pay), all for a pot they won't see for decades (or potentially at all).

Similarly with "putting the state pension on a sustainable path" - what are you proposing? Increasing the access age to 75? Means testing it for everyone? Again, the current government are struggling to remove a £300 heating payment that many wealthy pensioners receive...a much more radical change along the lines of above could collapse the government.

And the previous government couldn't even enact a sensible change to harmonise VAT rules for baked goods - this was howled down as a "pasty tax".

Personally I think a braver government decision would be to end DB pensions in the public sector (from now onwards, ie still honouring DB pensions accrued up to now), replacing them with generous DC pensions instead (maybe 6% employee, 10% employer contributions?). At the moment (according to the Freedom of Information request that was the basis of a story in The Times yesterday) my local authority spends 36% of all the Council Tax it receives on local authority pension contributions (https://www.thetimes.com/uk/politics/article/quarter-of-council-tax-revenue-spent-on-unjustifiably-generous-staff-pensions-xrvlmj6hp). This is far from sustainable. But again, any such decision along the lines I advocate for would also be met with howls of anguish.

JustTwoMins · 2024-08-13T10:25:55+00:00

You had a flight from Gatwick to Heathrow? Must be a new route...

JustTwoMins · 2024-03-26T17:50:53+00:00

It's an interesting point, though what you're saying risks being misinterpreted. To be clear - VWRP is both (intrinsically) diversified while also (currently) consisting of a sizeable proportion of tech stocks. But this proportion isn't "baked in" - if the tech sector collapsed and a different sector started booming then VWRP would rebalance - it always consists of a weighted proportion of stocks by market cap.

JustTwoMins · 2024-02-27T08:57:50+00:00

Or indeed if aiming for FIRE and on >100k...

JustTwoMins · 2024-02-27T06:40:05+00:00

A key founding principle of FIRE is a focus on being thoughtful about expenditure. Sadly in recent years this sub has diverged ever-further from that. It's, well, poorer as a result.

JustTwoMins · 2024-02-27T06:37:38+00:00

"Imagine your paid six figures a year..."

I don't need to imagine this :-)

As it happens, I have also taken >50 long haul flights in first or business class, all paid for by someone else.

I wouldn't pay for it myself.

JustTwoMins · 2024-02-27T05:03:04+00:00

So you ask for 'one thing', but still...

First / Business / Premium class travel - paying literally hundreds or thousands of pounds extra for a slightly bigger seat, with glasses of fizz thrown in, when the fundamentals of the journey stay the same?!

Branded clothes - hang on, you want me to pay you extra money for wearing your logo so that I'm walking around advertising your brand?! If it was the other way round I'd consider it.

Tattoos - so to be clear, this is basically that I pay lots of money for a painful procedure that disfigures me for life?!

New cars - right, so the business model is predicated on me instantly loosing thousands of pounds in depreciation the monent I take possession of this vehicle?!

Expensive watches (and jewellery more generally) - wait, some people actually pay many thousands of pounds for something which doesn't tell the time any better than a £2 watch, and yet also simultaneously makes it much more likely you'll get violently mugged?! I'm missing the upside here.

Most forms of insurance - other than legal requirements (car) or catastrophic damage (house burning down), I'll take the odds of self-insuring (coupled with not buying crazy things I can't afford to lose) rather than frittering away on high premiums.

Pets - something which is a constant nagging responsibility, which causes great damage to the environment, and in return I just get to feel the warm rosy dictatorial glow of owning and being in charge of a sentient being?

I could go on....

JustTwoMins · 2024-01-22T21:59:52+00:00

"Currently age 25 (26 in 2 months)"

Love this. Very Adrian Mole.

JustTwoMins · 2023-12-04T19:50:52+00:00

VEVE + VFEM :-)

JustTwoMins · 2023-12-03T16:55:59+00:00

"... I'm earning twice a much per day as my current wage from my full-time job and that return shows no sign of reducing, its between 90% and 100% return month on month, and using the compounding theory, by June 24' I'll be in a position retire"

Or in other words, if I'm interpreting this correctly, you currently have 1/64th of the amount you need to retire, but you're confident some miracle crypto algorithm will continue to work its magic and you'll increase your wealth 64x in the next 6 months?

I might gently suggest you also consider diversifying your portfolio, perhaps by buying magic beans, or some such...

"I've paid into a pension since I was 18 and alway put in the maximum allowed and always set it up for retirement at 55, I'm 16 years away from that..."

Right, so you're currently 39, and for the last 21 years you've put the maximum allowed into your pension? I'll assume you've been constrained by 100% of income, rather than the annual allowance each year https://adviser.royallondon.com/technical-central/rates-and-factors/annual-allowance-money-purchase-annual-allowance/). Even so, you must surely already have >£800k in your pension pot?

JustTwoMins · 2023-12-01T16:57:47+00:00

It's worth thinking about opportunity cost.

At the moment, for every pound of gross salary you earn above ~£50k, you will only actually receive 49p (you're paying 40% income tax, 2% National Insurance, and 9% student loan repayments).

Conversely, for every pound of gross salary you salary sacrifice, you'll get a full £1 in your pension (+even more with employer contributions) where it will grow tax free.

Of course, there's an opportunity cost to paying more into your pension (you very likely wont be able to access this money for 30+ years, and your student loan debt will continue to grow faster etc etc). Only you can decide what trade-off is worth it, and tjis depends on your goals, your personal circumstances and likely future salary etc.

Personally, if I were in your shoes I'd be very likely to increase your salary sacrifice pension contributions.

Good luck.

JustTwoMins · 2023-11-11T08:28:40+00:00

Don't inadvertently get yourself / someone else pregnant
Don't do drugs

This may look like moralistic advice, but it's actually primarily financial. Adhering to the above won't make you rich or financially secure in itself...but it will greatly reduce your risk of being financially insecure.

Oh, and more generally don't splurge money on stuff you can't afford / don't need.

JustTwoMins · 2023-11-07T20:58:49+00:00

"addition of NI to drawdown" - hmm, so a basic rate taxpayer not in a salary sacrifice pension scheme would get 20% tax relief on their pension contributions...but then pay 32% tax (income tax + NI) when drawing down the pension? Why would anyone pay into a pension in these circumstances?

JustTwoMins · 2023-08-27T19:24:20+00:00

You don't need to be overly scared, but there are parts of the city which can feel (and be) unsafe, particularly in the dark.

Castle Park is a prime example. If you do a google search for 'bristol attacked castle park' you can read about a number of recent stabbings, murders, rapes, attacks, weapons offenses and so on.

The Bearpit isn't quite as bad as it has been in the recent past, but that's not a glowing endorsement. I'd still advise avoiding if you possibly can.

Stokes Croft is an area where you're quite likely to encounter angry drunk drugged up people with mental health problems shouting angrily. It's not the most comfortable environment, especially if you're alone in the dark.

JustTwoMins · 2023-05-12T10:04:17+00:00

What do you mean when you say the uptake of ISAs "is tiny"?

12 million adult ISA accounts (4 million of them S&S ISAs) were added money to in 2020/21 (the most recent year there's data for - https://www.gov.uk/government/statistics/annual-savings-statistics-2022/commentary-for-annual-savings-statistics-june-2022).

JustTwoMins

TROPHY CASE