Barristers Income Protection

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Drewberry™ provide pensions, investment and insurance advice for Money to the Masses readers throughout the UK.

 

Why Barristers Income Protection?

 

Provides you with a tax free monthly income you can rely on should you suffer an accident or sickness.

 

Designed to cover your core monthly financial commitments such as your mortgage/rent, bills and food.

 

Income Protection is the one protection policy every working adult should consider. Which? Money 2013

 

Speak to our expert independent advisers or get an instant online quote to compare the UK’s leading insurers.

What is it for?
 

What does Income Insurance cover?

Accident & Sickness

When the ‘Own Occupation’ definition of incapacity is used the policy can payout for any medical condition that prevents you from working in your own specific job role.

As income protection policies do not use a set list of conditions they cover and many insurers do not have any standard exclusions, income protection is the most comprehensive form of accident and sickness protection available.

As a barrister being in a low risk occupation we have a whole host of insurers to consider who can provide protection up to a maximum of 70% of your gross earnings.

What does it cover?
 

How does Income Protection work?

Stage 1:
You cease working due to any accident or sickness which prevents you from doing your job role.

Stage 2:
You make a claim with the your insurer, which may require completing a claims form and providing documents such as your GP note.

Stage 3:
The insurer will start to pay a monthly tax free benefit after you have been unable to work for the length of your deferred period.

Stage 4:
The policy pays out until either you return to work or reach the maximum payout length, which could range from one year to retirement.

How does it work?
 

Do I need to protect my earnings?

When deciding if income protection is worthwhile it makes sense to weigh up the risk of something happening and the potential consequences:

The Incapacity Risk:
1 in 10 people have been unable to work due to illness or injury for +6 months (The Guardian/Unum Survey, 2011).

The Consequences:
With government incapacity benefit of only £99.15 per week, someone with a salary of £30,000 would suffer a 77% fall in income.

The Question:
If you lost your income how would you continue to meet your essential monthly outgoings if you didn’t have income protection?

Do I need cover?
 

Your Key Options

Choose your level of cover

Depending on the insurer, it is possible to cover anywhere from 50% to 70% of your gross (pre-tax) income.

Choose your deferred period

This is the length of time you would need to be off work before the policy kicks-in and starts paying out.

Choose your payout length

Short-term plans can payout for a maximum of 12 or 24 months and long-term plans can continue paying out either until you are well enough to return to work or you reach the end of the policy life, which is usually set in-line with your expected retirement age.

What are my options?
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Sam was knowledgeable and attentive and spent a long time explaining and working out what Income Protection insurance would be best for me.

Elizabeth Owen
10/10/2017

What is Barristers' income protection insurance?

Income protection insurance for barristers is a form of policy designed to provide you with a replacement income during a time of incapacity.

Should an accident or ill health prevent you from continuing your normal occupation, you will be able to receive a monthly payment from your insurance provider in order to help you maintain your monthly outgoings at a time when your income has ceased.

Do I need it?

Your daily life will depend very heavily on your ability to generate regular income.

That income may serve many purposes, one of the most obvious of which is meeting regular loan repayments for things such as cars and mortgages.

Yet even your routine monthly outgoings for things such as gas, electricity, telecommunications, school fees, food and clothing, may all be at risk in a situation where your income was suddenly reduced to zero.

In such circumstances, you might hope that various lenders and other suppliers would be tolerant and understanding of your predicament. They may well be so for a short period but their patience is likely to be limited.

Nor would be wise to rely on state help. The basic state benefits in such circumstances may be very modest and totally insufficient to maintain anything like your normal lifestyle.

It is also a reality of life that some forms of additional state aid for things such as mortgages, may be dependent upon a form of means testing whereby any existing savings you have would be expected to have been utilised before further assistance was available.

That is why many barristers choose to make arrangements for their own form of income protection insurance.

Of course, if you are not self-employed, you may be fortunate enough to have protection as part of a group scheme with your employer – so it is worth checking this out.

How does it work?

Should you be unable to continue your normal occupation due to accident or sickness you would make a claim against your policy.

Once your claim is accepted and you have seen out the deferred, your policy will start to provide you with a regular monthly income to a specified level.

How long that continues may, to some extent, be up to you as part of your selection of an appropriate policy and when you are fit enough to resume work:

  • Short term income protection policies typically pay out for up to 12 months (or 24 months with some providers)
  • Longer term income protection policies run until retirement age/ end of the policy life (as the average claim length with Liverpool Victoria (LV) in 2011 was for 7 years, you can see why this type of cover is very useful).

The amount of monthly income cover you select may be at your discretion up to a maximum of typically somewhere between 50% and 65% of your normal gross monthly income. As many barristers are sole traders your ‘gross income’ is classed as your profit before tax.

Of course, the higher level of monthly income cover you select, the higher your premium will tend to be.

Continuing income consideration

When setting your deferred period (i.e. the length of time you would need to be off work before the policy starts paying out) it is vitally important to consider any continuing income you would have coming in after incapacity.

It is common for barristers to still be receiving moneys from work undertaken prior to incapacity for around 6 months after as invoices trickle in. As insurers will assess continuing income at claim stage and typically deduct this income from the benefit they pay out it is important to set the deferred period at an appropriate length.

It is very common for barristers to set a deferred period of 6 months long, living off continuing income and savings during that period. Setting a deferred period of 6 months also saves on the cost of the policy, with premiums being around half as much relative to a deferred period of 4 weeks.

Getting own occupation cover

As a barrister; you appreciate precision when using definitions and that is why it is important for you to understand the meaning of own occupation cover versus suited occupation cover.

Some insurance policies may provide cover under own occupation terms whereas others will use suited occupation as their governing definition.

The former definition essentially means that a policy will pay out in circumstances where qualifying conditions mean you are unable to continue your normal occupation as a barrister in its accepted form.

The latter definition means that the policy provider may choose not to approve a claim in circumstances where they believed you are fit enough to continue income-generating activities in an alternative, related, activity.

The latter definition means that the policy provider may choose not to approve a claim in circumstances where they believed you are fit enough to continue income-generating activities in an alternative, related, activity.

An example might be in a situation where an injury or sickness meant you were unable to use your voice for an extended period.

That may well qualify for a successful claim under own occupation conditions but possibly under a suitable occupation policy, the provider might conclude that you were fit enough to continue clerical and other related activities as part of your general duties.

Own occupation cover is typically considered to be far more comprehensive and less subject to an insurance provider’s vagaries of interpretation than suitable occupation cover.

This may be worth keeping in mind when you are considering policy options.

What are my options?

When considering Barristers income insurance, you will need to decide upon the following:

How much monthly income protection you would wish to receive…

In the event of misfortune striking (remembering that in general, you can insure between 50%-65% of your gross salary).

How long a period of protection you wish to pay for?

Longer-term policies typically cover you up until your normal date of retirement or return to work but it may be possible to take out shorter-duration cover that would protect you for up to a period of around five years (though polices that pay out for 12 – 24 months are more common). As you might expect, shorter-duration cover may prove to be lower cost than longer term cover.

The deferred period duration…

Policies may provide you with the option of deferring the start of payments until a specified period of time has elapsed after claim approval. The longer that deferred payment period selected is, the lower the cost of your premium will typically be.

Do you want your sum insured to be linked to inflation?

Particularly with the longer term policies, this may be worth considering, so the payouts hold their value over time. Do note that with index-linked policies, even those with guaranteed (fixed) premiums will increase on a yearly basis to match the rise in cover.

Need some advice

In some situations, your income protection policy might be all that stands between you and serious financial difficulties.

That is why it is imperative to ensure that you have a policy in place that you understand and which you are confident will provide you with the cover you need. When looking for cover there are many types of sickness insurance so it is vital to get the right type as quality does vary considerably.

As an independent insurance intermediary, we are not tied to any one provider and we would welcome the opportunity to provide you with further advice and guidance on this subject. Please don’t hesitate to call us on 0208 432 7333.

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Actual Income Protection Claims

 

The table below details real life stories of how an income protection policy has saved someone financially following an illness which left them unable to work.

The information is from Liverpool Victoria's 2011 claims, it demonstrates how anyone can lose their income, regardless of age, gender or occupation, LV's youngest claimant in 2011 was just 22 years old.

Age at Claim
Gender
Occupation
Length of Claim
Cause of Claim
Last Monthly Benefit
Total Payout So Far
31
Male
Carpet Fitter
15 years
Brain damage from road traffic accident
£303.00
£55,449.00
43
Male
Accountant
7 years
Cyst removed from the Brain
£3,194.00
£255,520.00
46
Female
Veterinary Surgeon
12 years
Arthritis
£369.00
£51,291.00
48
Male
Estate Agent
14 years
Heart Attack
£4,883.00
£805,695.00
48
Male
Doctor
1 year
Depression
£3,357.00
£53,712.00
49
Male
Physiotherapist
3 years
Depression
£1,942.00
£73,796.00
48
Male
Quantity Surveyor
7 years
Stroke
£2,528.00
£207,296.00
51
Female
Marketing Consultant
2 years
Breast Cancer
£2,434.00
£48,680.00
59
Male
Solicitor
1 year
Parkinson's Disease
£2,156.00
£26,452.00
Source: http://www.lv.com/upload/IFA-Rebrand-2009/pdf/2012/aug/212248312PMFPPAPIPclaimsSummary.pdf
 
Our Mission at Drewberry™

To provide expert financial advice and deliver a passionate 5-star service to help educate our clients so they can make informed decisions.

To help individuals and businesses throughout the UK to plan their financial future whilst protecting them against the financial risks they may face.

To provide quality financial advice in a transparent, friendly and professional manner.

 

Occupation Definition Calculator

Make sure your Income Protection covers you in your 'Own Occupation'!

Too often individuals take out income protection without being fully aware of the incapacity definition on which their plan would pay out.

Will the plan pay out if I am unable to do my current job role? Or will it only pay out if I am unable to do any occupation?

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If you do not already have income protection this tool should provide you with guidance as to what to look out for and to ensure you do not fall foul of a lesser occupation definition.

Robert Harvey
Independent Protection Expert at Drewberry Insurance

Your Occupation
 
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Frequently Asked Income Protection Insurance Questions

 
I’m thinking about taking out an income protection policy. I can’t seem to find any information...
 
I’m looking for an insurance to pay me a salary if I suffer a minor disability, like a broken leg,...
 
I’m looking to take out income protection insurance and currently researching all the aspects of...
 
I was looking on the internet for permanent health insurance and keep coming across income protection...
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