Income Protection is a type of insurance designed to protect your earnings if you’re ever unable to work.
If you become too ill or injured and can’t perform your job, Income Protection will pay out a monthly income covering between 50% and 65% of your lost earnings so you are still able to meet your financial obligations.
We believe that Income Protection is one of the most vital insurance you can buy as it ensures that if the worst should happen, you won’t be without a source of income to support you and your family.
Taking out Income Protection can be a bit of a mine field and is a product that is best taken out with expert advice. We have a team of Income Protection experts who are on hand to help anyone considering insuring their income and securing their finances.
According to consumer group Which?, it’s the one policy every working adult should consider.
Income Protection is designed to pay out a regular monthly income, insuring your wages in case you ever become too ill to do your job.
Accidents and illnesses are a lot more common than most of us think. According to Drewberry’s Wealth & Protection Survey…
Meanwhile, approximately 70,000 people on average are injured at work in Great Britain every year and an October 2017 government report found that 300,000 people lose their jobs each year due to mental health conditions.
If you were forced to take more than 6 months off of work for any reason, how do you think you’d cope?
For many people, savings wouldn’t last long and they’d have little to fall back on in such a situation.
Income Protection can provide sick pay for self-employed workers who wouldn’t otherwise receive anything in the way of income if they were off work other than minimal state benefits.
Without the intervention of an employer, many self employed people would be left in a difficult financial situation if they couldn’t work.
It’s here Income Protection can kick in to pay out a regular income to replace lost earnings in the event an illness or injury prevents you from doing your job.
One of the main reasons why so many people use our Income Protection advice service is the large number of choices that need to be made when you take out a policy.
Facing this many choices might seem overwhelming at first, but at Drewberry our experts can help you through the process to get the best cover for your circumstances.
The first thing you will need to decide when you begin looking at policies is what you would like to have covered in your policy.
This is a standard Income Protection policy that will cover any accident or illness that prevents you from working.
Insurance providers don’t have a defined list of conditions you can claim for – instead what you are and aren’t covered for depends on your medical history and any pre-existing conditions.
Also, with own occupation cover, you are protected should any illness or injury prevent you from being able to do your specific job.
Some Income Protection policies can cover unemployment without the cause being an illness or injury.
Usually, they will cover forced redundancy and provide cover for up to 12 or 24 months allowing the policyholder time to find another job whilst still being able to meet their monthly financial commitments.
It’s important that you carefully look over protection policies that combine Unemployment Insurance with Accident & Sickness Cover.
Combined products are often not as strong on the Accident & Sickness element as a standalone Income Protection policy with separate Unemployment Insurance added on.
Independent Protection Expert at Drewberry
Moreover, Unemployment Insurance can be tricky to claim on, especially if you’re self employed or a company director, so it’s worth getting advice if this applies to you to ensure you’re taking out a policy with a realistic chance of you making a successful claim.
There are a range of options to choose from that will adjust the level and cost of cover you get from your policy, allowing you to tailor your policy to meet your specific needs.
The cease age is the age at which your policy ends. It’s typically possible to extend your policy to a cease age of 70.
However, many people are free from major commitments before this age and often roll back the cease age to 65 or even 60 as this can offer significant savings on the cost of Income Protection.
The deferred period is a decided length of time that you need to be out of work for before you can begin to claim for incapacity.
This can range anywhere from 1 day to 2 years. The longer you can wait before claiming Income Protection Insurance, the lower your premiums will be.
Guaranteed premiums, reviewable premiums and age banded premiums are the usual types of payment that you can choose from.
Each has a different initial cost and will alter how much you pay for your cover over time.
This refers to the length of your claims period. The best Income Protection is long-term and has an unlimited claims period which allows you to continue receiving benefits for incapacity right up until the day your policy ends.
However, some insurers offer short-term Income Protection as a cheaper alternative, which often has a maximum claims length of 1, 2 or 5 years.
A lot of confusion has surrounded these two types of protection products.
Many people have assumed that these two products are the same thing. However, there are a lot of key differences between Income Protection and Payment Protection that you need to be aware of.
While one product will offer reliable protection for you and your loved ones, the other won’t cover much more than your loan payments. That’s why we’d always recommend getting advice to make sure you’re getting the right product for your needs.
Designed to protect your income
|Designed to protect your loan payments|
Cover for 50%-65% of your earnings
Cover is aligned with your outstanding debts
Can offer long-term protection, paying out until you retire
Short-term protection only – policies pay out for a maximum of 12-24 months
Own occupation cover is available to protect you if you can’t do your specific job
Typically suited occupation cover, where you can only claim if you can’t do your job or another you’re suited to
You’re medically underwritten from the start of your policy, so you know what you are and aren’t covered for right away
Insurers assess your ability to claim only when you attempt to, meaning you don’t always know what will and won’t be covered
If you opt for long-term cover and have many years until the policy cease age, we’d typically recommend that you index-link your Income Protection benefit to ensure that it keeps pace with inflation.
It does cost a little more, but it will ensure the spending power of your payout won’t be eroded over time.
Think of the cost of a pint of milk 20 years ago – it was much cheaper back then!
Prices naturally increase with time and, if your Income Protection doesn’t increase along with those prices, you could be left with a shortfall if you don’t adjust for inflation.
The cost of Income Protection – also known as Accident & Sickness Insurance – depends on a variety of factors, which include:
In the below table, we’ve laid out the average monthly cost of Income Protection. To work out the cost of cover, we’ve assumed:
The Income Protection quotes below were pulled from our instant online quote engine and represent the cheapest policy that matches the above criteria from across the entire UK market.
There is a lot to consider when looking at insurers that goes beyond just the cost of their policies.
Some insurers offer additional benefits that can enhance your cover, for instance.
Comparing insurers can be a difficult task to tackle alone, which is why we’re here to help. As well as offering Income Protection advice, we collect and compare quotes from insurance providers to help you find the best deal for your circumstances.
AIG is one of only a handful Income Protection providers to offer cover for individuals with type 2 diabetes. It is also willing to offer diabetics guaranteed premiums and will not exclude diabetes in its policy, unlike other providers.
Aviva covers all policyholders with an own occupation definition of incapacity and, if you choose to return to work in a different occupation until you are well enough to return to your pre-incapacity occupation, Aviva will top up your reduced income with Back to Work Benefits.
British Friendly gives access to its Mutual Benefits program, which provides rewards such as vouchers for high street shops, discounted fitness tracking devices, emotional support services and online legal services. It is one of the few insurers that will cover pilots on an own occupation basis.
Cirencester Friendly provides you with a range of additional benefits and services, including a hospitalisation benefit and a Friendly Voice service that provides you with a personal nurse that you can contact for advice and emotional support.
The Exeter is one of the few UK insurers that is able to offer own occupation cover to workers in higher risk occupations, although such policies only offer age banded premiums.
Holloway Friendly has been in the Income Protection market since 1880 when it was founded by one of the key people involved in the creation of Income Protection as an insurance product. It offers cover to all individuals on an own occupation basis.
L&G Accident & Sickness Insurance comes with a free life cover element that pays out a maximum of 12 times your monthly benefit if you pass away while the policy is in force.
LV Accident & Sickness Cover offers free access to its LV Doctor Services, which include fast access to remote GP services, second opinion services and private prescriptions for policyholders and their children up to the age of 16.
Royal London Accident & Sickness Insurance can include Fracture Cover, which pays out a lump sum of between £1,500 and £4,000 on top of any benefit you’d receive for being off work if you receive a fracture of a specified body part
Shepherds Friendly allows you to apply to suspend cover and premium payments under your plan for a minimum continuous period of 3 months and up to a maximum continuous period of 24 months. This is known as ‘Career Break’ option.
Vitality provides a unique offering. While the core of its policy is similar to other providers, it also offers a unique set of additional benefits to those who participate in the Wellness / Optimiser programs that can include policy discounts and rewards.
At Drewberry, we offer free and impartial Income Protection advice, helping to pair you with the right protection to meet your needs.
If you’re interested in taking out Income Protection, our advisers will help you find one that suits your needs. We have access to the entire UK market, so are well-suited to search out the right policy for you.
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.
Given all the options and potential pitfalls it is often best to get expert Income Protection Advice.
If things are getting a bit confusing and you need some help please don’t hesitate to call us on 02084327333 or email firstname.lastname@example.org.
Director at Drewberry
I had the pleasure of dealing with Jake Mills in organising my insurance. Jake was fantastic to deal with — his patience and understanding really helped.