Answered by Robert Harvey
With income protection there are a number of options to choose from with regards to the insurer’s right to increase premiums over time. Please see below for the various options available.
Please note that these options are usually only available for long-term income protection plans. Payment protection plans only come with reviewable premiums as they are rolling contracts rather than providing cover for a specified term, such as 15 years.
With long-term income insurance policies it is possible to include the ‘guaranteed premiums’ option were the premium charged by the insurer remains unchanged irrespective of your age, number of claims made or the insurers overall claims experience.
Essentially, for an income insurance plan with guaranteed premiums the insurer has no right to change the amount charged over time based on these factors.
Short-term income protection plans (such as accident, sickness and unemployment policies) and some long-term plans come with ‘reviewable premiums’.
This means that the insurer does have the right to change your premiums but only based on general factors, such as the overall claims experience across all their customers and changes in interest rates, for example.
Age Rated Premiums
It is also worth noting that some insurers have ‘age-rated’ (or ‘low-start’) plans where the premiums increase with age. Care needs to be taken with these plans as the premiums can look very attractive upon taking out the policy but can increase rapidly over time and work out much more expensive over the term of the policy.
Frequently Asked Income Protection Insurance Questions
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