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Pilots Income Protection

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As a pilot there are a great many things that could prevent you undertaking your normal flight duties given the need for you to be in excellent health. Far more so than would stop your typical office worker doing their job.

Given this, many pilots feel it’s particularly important to take out comprehensive Income Protection Insurance to protect their earnings should they be unable to work due to any illness or injury.

We work with a lot of pilots from a whole range of airlines and many have come to the conclusion that Income Protection could be a more comprehensive option than the Loss of Licence Insurance they tend to be more familiar with.

  • Pilots Income Protection is designed to pay out a regular, tax-free monthly income if you suffer from an accident or sickness that prevents you from working.
  • It allows you to keep up with all your essential outgoings, including your rent / mortgage, bills, utilities and groceries.
  • The best Income Protection will cover you long-term, paying out right up until your chosen retirement date if you can never work as a pilot again.
  • You can choose to add on optional Unemployment Insurance, which will protect short-term against the risk of forced redundancy by paying out a benefit for between 1 and 2 years.
  • In 2018, leading insurers Liverpool Victoria and Legal & General both paid 95% of valid Income Protection claims.

According to consumer group Which?, Income Protection is the one policy every working adult should consider.

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What Does Pilots Income Protection Cover?

Pilots Income Protection is designed to protect against accidents, sicknesses, illnesses and injuries that medically prevent you from working as a pilot. This could be anything from the extremely serious, such as cardiac issues, to more minor problems such as back pain.

As mentioned, not every medical condition would necessarily disqualify you from flying and require you to forfeit your licence.

Back pain, for example, would not typically be serious enough to warrant your licence being suspended or revoked and so would not likely result in a successful Loss of Licence claim.

However, as long as it medically prevents you from doing your job, you’ll be able to make a claim on an Income Protection policy regardless of the status of your licence.

Given this, Income Protection is typically seen as more comprehensive than Loss of Licence protection.

What Doesn’t Income Protection Cover?

As with all insurance, there are some general exclusions that Income Protection simply doesn’t cover. These typically include:

  • Self-inflicted injuries
  • Illnesses / injuries sustained in pursuit of criminal activities
  • Illnesses / injuries sustained as a result of abuse of alcohol, solvents or other illegal / illicit drugs.

Aside from the above, there are no standard exclusions with Income Protection. Your coverage will be based entirely on your pre-existing medical history.

This means if you’ve suffered from a medical condition in the past 5 years it’s likely this condition will be need to be reviewed by the insurer and could potentially be excluded.

You may be able to get coverage for the condition after a set period on the policy where you don’t receive any advice, medication or treatment for that condition, although this is entirely at the insurer’s discretion as to whether they’ll review your policy.

Where we specialise in Income Protection we have direct access to the underwriters at the top UK insurers. This puts us in a great position to negotiate the most favourable terms for your specific circumstances including when there are complications with existing medical conditions.

The Difference Between Loss of Licence Cover and Income Protection

Loss of Licence Cover

Income Protection

Pays out a single cash lump sum or a monthly income for a set period until a ‘pot’ of funds is exhausted. This may not stretch over the long term if you were off work indefinitely.

Pays out a regular tax-free monthly income. Long-term Income Protection will pay out every month until your policy cease age, typically set to your retirement date.

Pays out in the event your licence is suspended or revoked due to illness or injury.

Pays out for anything that medically prevents you working.

Your licence must be suspended or revoked to claim; your licence may not be for a more minor illness / injury.

No requirement for your licence to be suspended / revoked to claim – you just have to be medically unable to work.

Many Loss of Licence policies cease at the age of 55.

Income Protection can last right up until your airline’s retirement age.

Do Pilots Need Income Protection Insurance?

As a pilot, it’s essential you’re fit and well to undertake your usual job role. It’s likely you’ll have regular physicals to sign off your fitness to fly and will probably therefore be aware of all the illnesses or injuries that could prevent you from working.

The Risk of Accident or Sickness

If you lost your regular income due to illness or injury, could your finances hold up under such strain?

For many people, the answer is simply no, they wouldn’t be able to survive if they had to rely on savings and state benefits alone. That’s where Income Protection can step in.

How Does Income Protection for Pilots Work?

There are four main policy options to consider when looking for Pilot Sick Pay Insurance, all of which will have a notable impact on the price of cover. These are:

  • Sum assured
    Depending on the insurer it is possible to receive anywhere from 50% to 70% of your gross (pre-tax) salary as a benefit each month.
  • Your deferral period
    How long you need to be off work before the policy starts paying out. Longer deferral periods reduce premiums notably compared with shorter ones. Note that for pilots many Income Protection providers impose minimum deferral periods.
  • Your policy cease age
    This is the age the protection ends. Most people align it to the age where they anticipate retiring, which is typically 65 for commercial pilots. However, not every insurer will offer cover right the way up until the age of 65, so it pays to know which insurer will work out best for you.
  • Your payout length
    Short-term plans pay out for a maximum of 1, 2 or 5 years per condition per claim, whereas long-term policies can continue paying out either until you are well enough to return to work or you reach your policy cease age.

Choosing the Best Premiums for You

There are three options to choose from when it comes to type of premiums for Executive Income Protection:

  • Reviewable premiums
    Are ‘reviewable’ as the insurer sees fit and so can rise in a variety of circumstances, such as if if the insurer has seen an increase in claims or based on economic factors. Reviewable premiums usually start out cheaper but are reviewed upwards and as such tend to work out more expensive across the life of the policy.
  • Age-banded premiums
    Also work out cheaper to begin with but then steadily rise each year. Unlike reviewable premiums, however, age-banded premiums can only rise by a preset amount laid out in your policy documents. These increases are solely linked to your age and the increasing risk of you claiming as you get older.
  • Guaranteed premiums
    Work out more expensive initially, but cannot be adjusted over the life of the policy unless you yourself make any changes to the plan.

Index-Linking Your Benefit

Index-linking your Income Protection is a way to ensure that a fixed benefit isn’t eroded over time by inflation.

Think of the cost of a pint of milk today compared to 10 or 20 years ago – it’s gone up considerably! Inflation acts on the cost of all goods and services over time, making them more expensive and therefore harder to afford if your Income Protection benefit remains static.

Indexing your benefit means that it will move in lockstep with inflation to ensure that it will never be eroded in real terms.

Your Definition of Incapacity

Getting the right definition of incapacity is important because it’s how the insurer will determine if you’re fit for work and therefore able to make a claim.

There are three main definitions of incapacity to consider with Income Protection:

Own Occupation Cover

Own occupation cover means that you will be entitled to your benefits as long as your injury or illness prevents you from working in your specific job role as a pilot.

Suited Occupation

Policies that use a suited occupation definition of incapacity mean that in order to claim benefits, you have to be unable to undertake your current job role or any other job where you may have experience or education to perform.

This could mean a pilot who is deemed unfit to work as a pilot may not be able to claim because they would be suited to doing another occupation, such as teaching in a flight simulator for example.

Any Occupation / Work Tasks

This is a definition of incapacity that means you can only claim if you’re so totally unfit to work that you can’t work in any occupation / perform a set number of tasks required at most basic jobs.

It’s the most difficult to claim on and in general we’d recommend it’s best avoided.

Victoria Slade Independent Protection Expert at Drewberry

It is important to note very few insurers offer Pilots Income Protection with an own occupation incapacity definition.

Most of those who do require you to set-up cover through a specialist such as ourselves.

If you need any help please don’t hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Victoria Slade
Independent Protection Expert at Drewberry

Claiming On Pilot Disability Insurance

If you feel that you’re going to be out of work for longer than your deferred period, the first thing to do is make sure the insurer knows this.

While you won’t be able to claim your benefit until the end of your deferred period, starting the claims process as soon as you take leave from work allows your insurer can keep track of how long it has been since you stopped working and when to start paying a claim.

On claiming, you will need to provide your insurer with a completed claims form and evidence of the health condition preventing you from working, which is usually given in the form of a note from your GP.

Other evidence required might be in the form of notes from specialists / consultants or copies of diagnostic tests / scans. These should all be held within your medical records, which the insurer may write to your GP for permission to see.

Once you’ve been out of work for longer than your deferred period, you’ll begin to receive a tax-free monthly income from the policy until either:

  • You’re well enough to return to work
  • You reach the end of your claims period (1, 2 or 5 years for short-term policies)
  • Or the policy ends (typically at retirement, for long-term cover).

Neil’s Cancer Claim With British Friendly

Neil is a client of Drewberry and took out an Accident and Sickness Insurance policy with British Friendly. He was a member for 4 years before he needed to claim.

He became unwell and had pains in his stomach. After consulting his GP and having some further tests Neil was diagnosed with stage 2 Bowel Cancer and needed to make a claim.

🤕 Read More About Neil’s Claim

How Much Does Pilots Income Protection Cost?

The cost of Sickness Insurance for pilots depends on a variety of factors, most of which are policy factors discussed above.

However, there are also some personal factors that also impact the cost of Income Protection, such as:

  • Your age
    The older you are at the start of the policy, the higher the cost of Income Protection
  • Any health conditions you may have
    An insurer may look to increase the premiums if you have a health condition or simply exclude that condition outright, although for most pilots this won’t apply because of the requirement to be in excellent health
  • Your smoker status
    Smokers are more likely to get ill, and to become seriously ill, due to the detrimental health impacts of smoking.

As you can see there are many influences on the price of Income Protection, but we’ve put together a table with an average figure for three pilots of various different ages.

To come up with these figures, we’ve assumed:

  • The individual is a healthy pilot
  • They want a benefit of £2,000 a month
  • They’re looking for a 13 week deferral period
  • Their cease age will be age 65
  • They’re looking for long-term cover
  • They’ve opted for age-banded premiums.

Age 25

Age 35

Age 45

£42.00

£51.60

£93.80

Compare Best Income Protection Insurers for Pilots

There are only four insurers in the marketplace who offer pilots Income Protection with an own occupation incapacity definition. This is the best definition of incapacity on the marketplace and the one we feel it’s particularly important pilots choose.

british friendly

British Friendly

British Friendly will cover pilots up to the age of 65 on an own occupation basis with age-banded premiums.

  • Maximum benefit: 70% of gross income up to £45,000 per year
  • Deferred period for pilots: 13 / 26 / 52 weeks
holloway friendly

Holloway Friendly

Holloway Friendly will only cover pilots up to the age of 55 with a minimum 26 week deferral period.

  • Maximum benefit: 60% of gross income up to £100,000 per year
  • Deferred period for pilots: 26 / 52 weeks
liverpool victoria

Liverpool Victoria

Liverpool Victoria will cover pilots on an own occupation basis up to the age of 65. However, it offers pilots guaranteed premiums and, as pilots are considered ‘category 4’ occupation, this makes LV’s premiums typically the most expensive on the market by some margin.

  • Maximum benefit: 60% of gross income up to £12,500 per month
  • Deferred period for pilots: 4 / 8 / 13 / 26 / 52 weeks
Shepherds friendly

Shepherds Friendly

Like Holloway Friendly, Shepherds Friendly will only cover pilots with a minimum 26 week deferral period and up to the age of 55.

  • Maximum benefit: 70% of gross income
  • Deferred period for pilots: 26 / 52 weeks

Get Expert Pilots Income Protection Advice

Pilots may find it especially tricky to get Income Protection, especially on an own occupation basis. To ensure that you’re getting the right cover for your needs, please don’t hesitate to get in touch.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

  • There is no fee for our service
  • We are independent and impartial
    Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
  • We’ve got bargaining power on our side
    This allows us to negotiate better premiums for you than you going direct yourself.
  • You’ll speak to a dedicated expert from start to finish
    You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
  • Benefit from our 5-star service
    We pride ourselves on providing a 5-star service, as can be seen from our 2195 and growing independent client reviews rating us at 4.92 / 5.
  • Gain the protection of regulated advice
    You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
  • Claims support when you need it the most
    You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.
Tom Conner Director at Drewberry

Taking out Own Occupation Income Protection as a pilot can be a bit of a minefield.

We are here to help, please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Tom Conner
Director at Drewberry

Extremely satisfied with the help and advice from Drew, since the beginning him understood what I was looking for and have the patience to help me out with all my questions and doubts. Didn’t tried to be push or annoying calling me all the time like so many did before. At the end we find the perfect medical policy for me and my daughter that covers everything that we need. I more than recommend them and if in the future I need something else for sure I will contact them again. Giving only 5 stars because I can’t give 6!!!!

Natasha Caversan Mucci
07/06/2019
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