Should I take guaranteed or reviewable premium income protection?

I am going to take out income protection insurance but wasn’t sure what is best reviewable or guaranteed premiums? What is the difference between the two types?

Question asked by Anna Stephens
Compare Top 10 UK
 Protection
Insurers
 
Takes approx. 60 seconds
Type of Policy
Income Required
per
month
Date of Birth
Loading your options...
Thank you for using our Quote Tool
If you need some help, just call us!
T: 0208 432 7333
Our in-house Experts are here to provide FREE impartial advice!
Our Experts can answer all your questions
Our Experts can send you more appropriate options based on your personal circumstances

Very important if you are either Self-Employed or a Company Director.

Our online quote tool is good but our Experts are better

Oue Experts have access to far more insurers and can often find a better deal offline.

Saves you time, let our Experts do what they are best at

Answered by Andrew Jenkinson

The difference between Reviewbale and Guaranteed premiums

When taking out an income protection policy there is an option for you to decide if you would like guaranteed or reviewable premiums, and there is a very big difference between the two.

What are guaranteed premiums?

With guaranteed premiums the monthly premiums you pay would remain fixed over the entire life of the policy. For example, if the monthly premium was £30 at the start of the plan it would also be £30 at the end of the plan. In other words, the insurer ‘guarantees’ not to change the premiums*.

What are reviewable premiums?

With reviewable premiums the insurer has the right to change the monthly premiums over time. These changes may be due to your rising age and the insurer’s attitude towards risk based on average claims and wider economic factors. This means that the monthly premiums you pay could rise significantly over time.

Reviewable or Guaranteed Premiums?

With long policy terms, such as over 20 or 30 years, the total amount of premiums paid usually works out lower with guaranteed rates rather than reviewable, even though premiums are initially higher with guaranteed rates. This is especially the case for younger workers who can gain very low fixed premiums.

Which type of premium is best for you will depend on your specific situation so it is usually best to speak to an adviser first. One of the issues with reviewable premiums is that the monthly cost can rise significantly over time so it important to ensure that the plan is affordable both today and in the future.

One point to watch out for is that some insurers specifically increase premiums with age and can therefore offer very low premiums today that rise significantly over time, sometimes by over three times the initial premium. With these plans the policy terms should contain a table setting out likely premium rises with age.

*It is important to note that if you decide to add the option to link your monthly benefit to changes in inflation then it is usually the case that both the monthly premium and the monthly benefit will rise each year with inflation, even with guaranteed premiums (although this does vary from insurer-to-insurer as some insurers will also take age into account when making the inflation adjustment).

Get in contact…

If you’re looking to take out Income Protection it might be a good idea to speak with an expert. At Drewberry, we know all the insurers products inside out. We have access to the whole of market and offer a fee free service for our advice. Our telephone number is 01273 646 484 or alternatively you can email us on help@drewberry.co.uk

guaranteed premiums
 
reviewable premiums
 
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.
Compare Top 10 UK Insurers
  Takes approx. 60 seconds
 - 
Need help? 
Call us on 

Frequently Asked Income Protection Insurance Questions

 
I’m a keen cyclist and looking at income protection to cover my income if i’m too ill to...
 
I was wondering whether income protection insurance premiums can go up with age? I can afford the premiums...
 
I earn £26k gross income per annum with up to £5,000 (unguaranteed) bonuses per annum. I work for a...
 
I’m thinking about taking out Income Protection but one thing i’m unsure on is if I will...
Need Help? Live chat now and get an instant answer from our Experts...

Neil
Pensions

Victoria
Insurance
Our Latest Reviews
Andrew Giles
10/04/2018

From start to finish a very professional and courteous outfit. A very efficient company with a no nonsense approach. Would recommend.

Mark Burbidge
13/04/2018

First class service from start to finish. Sam Carr was very helpful in setting up my new insurance policies. He kept me up to date throughout the process and provided full explanation and advice on the products and was always available to help.

Doug Muirhead
10/04/2018

Excellent personal service from Matthew Giles, made sure we received a tailor made quote that ideally suited our requirements as a family.

We are rated 4.9/5 based on 1512 independent client reviews.
To read more of our independent client reviews click here →
REVIEWS
EXCELLENT
4.92 / 5 Average
1548 Reviews
R Steer
Overall Rating
Josh, Nick & Sam helped me set up PHI & Life insurance when I set up my own company. The application process wasn't straight forward due to my medical history, but the team made everything as simple as possible.
C Ash
Overall Rating
I have not started my health cover yet, bus so far the introduction has been very efficient and speedy.
G White
Overall Rating
Clear and concise information
D Muirhead
Overall Rating
Excellent personal service from Matthew Giles, made sure we received a tailor made quote that ideally suited our requirements as a family
S Walker
Overall Rating
Great service, independent advice, not pushy and very consultative. I would have no hesitation in recommending.