How do I reduce my income protection premiums?

I’ve already got Income Protection and but i think i’m paying too much for it. Is there any way to reduce the cost of this? I’m thinking of cancelling it but wanted to check first.

Question asked by Peter Brain
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Answered by Andrew Jenkinson

There are several options for reducing your income protection premiums.

1. Increasing the deferred period

This is the time before the policy will pay out. The longer the deferred period the cheaper the insurance premiums, therefore changing your deferred period from 1 month to 3 months will cut costs considerably.  When deciding on a deferred period you should consider how much sick pay you get from your employer and what savings you have available to use in an emergency.

2. Decreasing cover to cover essential outgoings

Make sure that you are not over insured as extra cover will increase your monthly premiums.  However it is important to make sure that you are not under insured either.  Work out how much you need each month for:

  • Rent and mortgage
  • Bills (council tax, utility, phone and internet)
  • Food
  • Loan repayments

3. Reducing the payment period

Income protection usually pays out until the end of the plan or until you are well enough to go back to work. However, you can reduce your premiums by reducing the number of years for which you would receive benefit.   This would require careful consideration as you may suffer from a long term illness and not be able to work after the period of time has expired.

4. Reducing the plan term

Many people set their income protection to expire at 65 as this is the age at which they expect to retire.  If you plan to retire before then it does not make sense to pay for income protection up to 65 and the premiums can be reduced by reducing the term.

5. Looking around for another insurer

It makes sense to speak to an adviser who has access to the plans from the whole of the market.  This way they can search for the best value policy for you.  This will depend on your particular circumstances so an insurer who is cheaper for your friend might not be the cheapest for you. If you already have a plan in place it might be cheaper to switch to another insurer in some circumstances but you would need to go through your options with an adviser.

6. Getting insured at an earlier age

The older you are when you take out the policy the more the premiums will be.  Even though by taking out a policy at a younger age you may pay premiums for a greater number of years you could still pay less over all and of course you will be covered for a greater number of years. Therefore it is best not to delay in taking out an income protection plan.

Seek advice

Online quotes for short term and long term income protection are available below.  Alternatively you can call to speak to one of our advisers on 0208 432 7333 and they will be able to take some details from you and provide a range of quotes from across the market.

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monthly premiums
deferred period
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
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