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How Much Does Income Protection Insurance Cost?

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What Is Income Protection?

Income Protection is an insurance policy designed to pay out a replacement income if you can’t work due to accident or sickness.

It provides loss of earnings protection for you and your family in the event that illness or injury keeps you from undertaking your job.

Most people would struggle to survive on government benefits and have limited savings that wouldn’t last very long in the event of a real health emergency. For many working adults it can be an invaluable form of financial protection.

When it comes to working out the cost of Income Protection there are a number of factors to consider including:

  • Your current age and the risk associated with your occupation
  • The level of cover and the length of time you require the policy
  • How quickly you need the policy to pay out a claim

Irrespective of the options you choose, it is important to compare the premiums offered by all leading insurers so you know that you are getting the best deal.

Our income protection quote tool compares the top 10 UK insurers so you can find out the potential cost of a suitable policy in less than a minute.

According to consumer group Which?, it’s the one policy every working adult should consider.

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Factors That Determine the Price of Income Protection

The typical cost of an Income Protection Insurance policy will vary depending on a number of factors, making it hard to generalise without knowing more about you as an individual.

However, the below points will make a notable difference to your premiums and are what our expert advisers take into account when setting up a suitable Income Protection policy for your budget.

Policy Factors Impacting the Cost of Income Protection

Some of these factors you can influence, including:

  • Your level of cover
    The amount you’ll require each month to sustain your core outgoings
  • Your cease age
    The age at which you want your policy to finish, typically set to your expected retirement date
  • The deferral period
    How long you can wait before the insurance will kick in and pay out after you’re signed off work sick
  • The claims period
    How long you can claim per condition, which could be a maximum of 1, 2 or 5 years for short-term policies or right up until your retirement age for long-term Income Protection
  • Indexation
    The prices you pay in shops don’t stand still – think how much more a pint of milk costs now compared to 10 or 20 years ago – so you have the option for your Income Protection benefit to rise in line with inflation so you’re never caught short by rising prices. This will mean your premium rises as well, but to compensate so will your benefit each year along with inflation.

Premium Type

Another option you may want to consider is the type of premium you choose. This will have minimal effect on the initial cost of cover but could significantly increase the amount Income Protection will cost over time.

  • Reviewable premiums
    The insurer can ‘review’ these at any time, which means that they may rise in a number of circumstances, e.g. if the insurer has seen an increase in claims or unfavourable economic factors have occurred. Such premiums do start out cheaper but are then reviewed upwards semi-regularly and typically therefore work out more expensive over the life of the policy.
  • Age-banded premiums
    These premiums also work out cheaper at the start but rise each year. Unlike reviewable premiums, however, age-banded premiums can only rise by a preset amount laid out in your policy documents. Any increases are solely linked to your age and the growing risk of you claiming as you get older.
  • Guaranteed premiums
    Potentially work out a little more expensive than the above two options initially, but the insurer cannot adjust them over the life of the policy unless you yourself make any changes to the plan. This generally means guaranteed premiums work out cheaper over the life of the policy, especially if you take out cover when you are young and healthy, as premiums are locked in from the start and can’t change with time.

Personal Factors Impacting the Cost of Cover

Other factors involved in pricing Income Protection are more personal to you and are therefore harder or impossible to control for, such as:

  • Your age
    The older you are when you take a policy out, the more premiums will cost due to your increased of claiming the older you become
  • Your health
    If you have any pre-existing medical conditions, or a family history of certain conditions, the insurer may increase premiums to cover the risk or simply exclude that issue from coverage entirely.
  • Occupation
    As some occupations are riskier than others the cost of your plan will vary depending on your job duties. The lowest risk occupations are those that are office based and the riskiest are those that involve a high degree of manual work where an injury on the job is more likely and doing that job will be hard even with a minor injury compared to having that same injury in a typical office role.
  • Your smoker status
    Smoking is bad for your health and so smokers are charged more for Income Protection to cover the increased risk of them making a claim. Going smoke-free for 12 months could potentially halve the cost of Income Protection.

Comparing the Cost of Income Protection Insurance

For the policy options you choose, different insurers can quote very different monthly premiums so it is vital to compare the cost of the policy across all leading UK insurers to ensure you are getting the best price for your cover.

To make your life easier, we have built an instant income protection quote tool so you can compare both the policy details and the cost of each policy, enabling you to gain the most cost-effective Income Protection policy.

Example Pricing of Income Protection

The cost of Income Protection can vary considerably depending on your age, health, occupation, smoker status, sum assured and all of the other factors discussed above.

In the table below, we’ve highlighted how much Income Protection would cost for a manual worker (a plumber) and an office worker (an accountant) of three different ages.

To pull these Income Protection quotes we’ve had to make a number of assumptions, including:

  • The individual is applying for an £1,500 a month benefit
  • The individual wants guaranteed premiums that will never increase (unless they’ve opted to index-link the policy)
  • They want cover up to the age of 65 that will pay out long-term, rather than for just 1, 2 or 5 years
  • They have a 4 week deferred period
  • They’re a non-smoker
  • Cover is on an ‘own occupation’ basis, so they’ll get a payout if they’re medically unable to do their own specific job.

Age at Application

Age 25

Age 35

Age 45

Occupation

Cost of Premiums per Month

Office Role
Accountant

£31.03
£46.39

£74.95

Manual Role
Plumber

£39.31

£53.39

£99.75

The above Income Protection costs are only example premiums for a fictional person. To get truly accurate pricing we would need to understand your current state of health as well as any additional risks your occupation might entail including extensive overseas travel or business mileage.

Making Sure You Get ‘Own Occupation’ Income Protection

In the above example, the insurer that worked out cheapest for those metrics for the accountant was very different than the insurer that worked out best for plumbers.

Why Own Occupation Is So Important

One of the key pricing factors is your occupation because the risk of injury varies considerably depending on the everyday job role.

It is very important to note that some insurers may offer a low premium because they are not offering ‘own occupation’ cover, which is often the case for people who work in manual occupations.

They may be offering what’s known as ‘suited’ occupation, where the insurer is entitled to assess your health and declare you fit to do another role your skills and experience ‘suit’ you to and therefore decline a claim.

This can clearly be fairly subjective and is not typically what we would recommend for obvious reasons.

For our clients we will always make sure any Income Protection options we recommend have an Own Occupation definition to ensure they have the most comprehensive form of cover.

Get Expert Income Protection Advice

The cost of Income Protection can vary considerably depending on your personal circumstances and the choices you can make with regards to your policy.

There are a number of pitfalls to avoid including policies with less than desirable definitions of occupation, premiums which can rise over time as well as paying over the odds for your plan if you don’t research the whole market.

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 2274 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

Find the most suitable Income Protection can be a bit of a minefield.

If it is all getting a little confusing please don’t hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Tom Conner
Director

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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