Why Barristers Income Protection?
Barristers Income Protection Insurance provides you with a tax-free monthly income you can rely on should you suffer from an accident or sickness.
Benefits are designed to cover your essential financial commitments, such as your mortgage, utility bills, and food.
“Income Protection is the one protection policy every working adult should consider.” Which? Money
Speak to our expert independent advisers or get an instant online quote to compare the UK’s best Income Protection insurers.
What Does Income Protection Insurance Cover?
Accident & Sickness
When the ‘Own Occupation’ definition of incapacity is used, an Income Protection policy can pay out for any medical condition that prevents you from working in your own specific job role.
As these insurance 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 you are in a low risk occupation. This means we have a whole host of insurers to consider who can provide protection worth up to a maximum of 70% of your gross earnings if you can’t work due to illness or injury.
How Does Income Protection Work?
You stop working due to any injury or illness which prevents you from doing your job role.
You make a claim with the your insurer, which may require completing a claims form and providing documents serving as evidence of your health condition, such as a note from your GP.
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.
The policy pays out until either you return to work or reach the maximum payout length, which could range from one year to retirement.
Do I Need to Insurance My Earnings?
When deciding if Barristers Income Protection is worthwhile, it makes sense to weigh up the risk of something happening and the potential consequences:
The Incapacity Risk:
In 2016, one of the top UK insurance providers, LV, paid out around £14 million in Income Protection policies alone. Being incapacitated and unable to work is a lot more common than most people believe.
Employment and Support Allowance – the main government sickness benefit – starts as low as £73.10 per week for over 25s. Such a low figure means it’s very possible that you’ll face a drastic drop in income that makes it difficult to maintain your current lifestyle if you can’t work.
If you lost your income how would you continue to meet your essential monthly outgoings?
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 is Barristers Income Protection Insurance?
Barristers Income Protection is a type of Income Protection Insurance policy designed to provide barristers 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.
Given that almost 4 in 5 barristers (according to the Bar Standards Board) are self-employed and work through a set of chambers, there may not be any sick pay to back them up should they fall ill.
Do Barristers Need Income Protection Insurance?
Mental health issues are some of the most pressing issues for barristers and members of the court. 1 in 4 people in the UK will experience a mental health problem per year and mental illness still remains the most common Income Protection claim.
The next most common claims are musculoskeletal disorders and cancer. Although health problems such as cancer are serious, musculoskeletal issues can be no less debilitating and are particularly common among desk workers.
If you are forced to take leave from your work to recover, without the right financial resources you may not get better in time to return to work before you run out of income.
The basic state benefits in such circumstances are typically modest and insufficient to maintain anything like your normal lifestyle.
That is why many barristers choose to make arrangements of their own and cover themselves with Income Protection Insurance.
Income Protection Stories: What Our Clients Say
How Does Income Protection Insurance for Barristers Work?
Should you be unable to continue your normal occupation due to accident or sickness, you would make a claim against your Barristers Income Protection Insurance policy. This process involves contacting the claims team of your Income Protection provider and providing them with a completed claims form – which will either be available by post or online – and sufficient medical evidence of your condition.
Once your claim has been accepted, you will need to wait out your deferred period, which is the length of time during which you will need to be out of work in order to begin receiving your benefits.
After this time, your policy will start to provide you with a regular monthly income to a specified level. This normally stands at 50% to 70% of your gross earnings.
Short-term Barristers Income Protection Insurance will pay out for a maximum of 1 or 2 years per claim. Long-term policies, on the other hand, can pay out right up until your retirement. This can be useful as the average claim length for Income Protection for one of the top providers, Liverpool Victoria, is 7 years.
Independent Protection Expert at Drewberry
Barristers Must Consider Continuing Income
When setting your deferred period, it is vitally important to consider any continuing income you would have coming in after incapacity.
Given that we’ve set up a lot of insurance for barristers, we know how common it is for barristers to still be receiving monies from work undertaken prior to incapacity for around 6 months after they have to stop working 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 or longer, 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.
Income Protection Options for Barristers
When taking out Income Protection for Barristers, you will have a range of options to choose from that will allow you to tailor your cover to suit your specific needs.
How Income Insurance Do You Need?
While it may be tempting to get the maximum level of cover to ensure enough income, remember that the more income you need from your policy the more expensive your premiums will be.
Instead, to avoid over or under insuring yourself, you should take a close look at your average monthly expenditure. You can use this amount to decide how much of a monthly benefit you would need, leaving a little bit of wiggle room in case of emergencies.
Length of Claims Period
The best Income Protection policies will pay out long-term, so after the end of your deferred period if you can’t ever work again it will keep paying up until your retirement. If you get better, the policy will continue to pay out until the point you’re well enough to return to work.
Short-term policies are a low-cost option. These will pay out for a maximum of between 1 and 2 years per claim and then stop, even if you can’t go back to work after that period.
Here, the difficult choice you need to make is to decide between lower premiums or comprehensive cover.
What is the Best Deferred Period?
When setting your deferred period, take into consideration that you may still have invoices coming in even if you aren’t working and insurance providers will not pay out until you have completely stopped receiving income. The best deferred period would be one that ends at around the same time as your income stops, which we recommend would be around six months.
The longer you set your deferred period, the lower the cost of your policy will typically be, which is something to think about when you choose yours.
What type of premiums would you prefer?
There a three common types of premiums that you will find on Income Protection policies for Barristers. The type that you choose, however, will depend on your circumstances.
These premiums will stay at the same price for the entirety of your policy. While they might be the more expensive option when you take out your policy, they will not change no matter how long you have your policy.
These policies are tied to your age and will increase by a certain amount each year. Normally, these premiums increase at a fixed rate, usually in relation to a ‘premium table’ which shows you exactly how your premiums will change each year. These premiums can get more expensive the longer you have your policy, but these increases are predictable over time.
These premiums can change drastically throughout the term of your policy as well as quite suddenly. This type of premium involves your provider reviewing your policy each year and adjusting your premiums in accordance with any changes to you, your policy, or the the insurance company’s situation. This means that if the company see poor investment returns or if there are changes in tax, your premiums might one year jump in price unexpectedly. We normally recommend that people avoid policies with reviewable premiums as the cost can be unpredictable.
Do you want your income protection benefits to be linked to inflation?
Particularly with the longer term policies, linking your Income Protection benefits to inflation may be worth considering to ensure they hold their value over time. However, you should note that even with guaranteed premiums, your premiums will increase with inflation as well to take into account your increasing benefit.
You should also look out for insurers who may add an additional increase to your premiums for every time that your cover is increased. Some insurance providers will increase your premiums by 1.5 or 2 times the percentage increase of your cover, which means that you may find the cost of your policy going up by more than inflation over time.
Getting Own Occupation Cover
Insurers use different definitions of incapacity to determine whether or not you are entitled to your Income Protection benefits. These are something to be aware of when buying Income Protection as a barrister.
This is the best definition available and should be the one that you look out for when applying for your policy. Having this definition of incapacity applied to your policy means that as long as you are unable to perform your duties in your specific occupation, you can be defined as ‘incapacitated’ and are entitled to make a claim.
This can be highly beneficial if, for example, you injure your throat and are unable to speak. In another occupation, this may be a minor injury and not necessary to your role, which means that the insurer will not pay out as you could go and do a job you’re suited for elsewhere not using your voice.
But, because the ability to speak is highly relevant to your occupation as a barrister, an Income Protection policy underwritten on an own occupation basis would pay out because you are unable to properly perform your occupational duties.
If you have a long-term policy, you can also continue claiming on your policy until you are fully capable of returning to your original occupation.
This definition doesn’t provide as much cover as ‘own occupation’. With this definition, you would be able to claim and continue claiming as long as you are incapable of performing typical duties in your occupation as well as in occupations that you are suitably qualified for.
This can cause issues as it may be the case that your insurer will refuse to pay out if they believe that you are capable of returning to work, even if you only capable of taking on a lower paying job role rather than returning to your pre-incapacity occupation as a barrister.
Any Occupation/Activities of Daily Living
These definitions of incapacity are normally used to cover professionals in ‘high risk’ occupations, but you may still need to keep an eye out for it when applying for your policy. The use of this definition means that you must be incapable of doing the duties of any occupation before making a claim. Naturally, this is highly subjective.
Your insurer will give you a list of typical daily activities such as walking, climbing stairs, lifting a certain weight, washing, dressing and feeding yourself etc. In order to have your claim approved, you will have to be injured or ill to the point that you are unable to perform at least 3 of these tasks.
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?
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.
Independent Protection Expert at Drewberry Insurance
Compare Top 6 UK Income Protection Insurers
Oliver did an excellent job in making the right recommendations. He's been very patient in dealing with my request and helping me choose the right product. Well done and thanks very much!
Advice on Income Protection for Barristers
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 📞 01273646484 to arrange cover or ask us any questions you might have.
Independent Protection Expert at Drewberry