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Getting Income Protection Advice

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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.

rob harvey, head of protection advice at drewberry Victoria Slade Independent Protection Expert at Drewberry sam barr-worsfold independent protection expert at drewberry

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

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Who Needs Income Protection Insurance?

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.

Self-Employed People Are Particularly Vulnerable

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.

Setting Up Income Protection

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 Different Types of Income Protection

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.

Accident & Sickness

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.

Accident, Sickness & Unemployment

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.

Michael Barrow
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.

Your Key Policy Factors

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.

Cease Age

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.

Deferred Period

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.

Premium Type

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.

  • 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 usually start out cheaper but are then reviewed upwards and typically work out more expensive over the life of the policy.
  • Age-banded 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
    Work out more expensive 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.

Do I Need Short or Long Term Income Protection?

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.

Income Protection or Payment Protection Insurance?

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.

Income Protection
Payment Protection

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

Should I Index My Benefit?

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.

How Much Does Income Protection Cost?

The cost of Income Protection – also known as Accident & Sickness Insurance – depends on a variety of factors, which include:

  • Sum assured
    The amount of income you’ll require each month from the policy
  • Your age
    The older you are at the start of the policy, the higher the cost of Income Protection
  • Your policy cease age
    The age at which you want the policy to end (usually at your predicted retirement age) will impact the cost of a policy, with premiums being higher the older you set this
  • Any health conditions you may have
    An insurer may look to increase premiums if you have a pre-existing condition or simply exclude it outright
  • Your smoker status
    Smokers are more likely to get ill, and to become seriously ill, due to the detrimental health impacts of smoking and so are charged more for Income Protection
  • Your deferral period
    Similar to a car insurance excess, the deferred period reduces the cost of cover the longer you set it for; the typical length of a deferral period is usually set to how long you could sustain yourself with savings / sick pay.

Average Cost of Accident and Sickness Insurance

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 individual is a healthy office worker
  • They want a benefit of £1,500 a month
  • They’re looking for an 8 week deferral period
  • Their cease age will be age 65
  • They’re looking for long-term cover, so they can claim right up to retirement if necessary
  • They want to guarantee their premiums for the life of the policy.

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.

Age

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25

£26.77

£36.09

35

£39.13

£49.58

45

£56.35

£84.31

Comparing Income Protection Insurance Providers

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 logo

AIG

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.

  • Maximum coverage:
    • 60% of the first £30,000 of your salary
    • 55% of salary between £30,000-£100,000
    • 45% of any salary £100,000+
  • Deferred periods: 4 / 8 / 13 / 26 / 52 weeks
  • Maximum entry age: 54
aviva

Aviva

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.

  • Maximum coverage: 55% of your pre-tax salary, up to a maximum of £240,000 per year.
  • Deferred periods: 4-104 weeks (104 weeks is the longest available deferred period for UK Accident & Sickness Cover)
  • Maximum entry age: 59
british friendly

British Friendly

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.

  • Maximum coverage: 70% of your pre-tax salary, up to a maximum of £45,000 per year.
  • Deferred periods: Day 1 / 1 / 4 / 8 / 13 / 26 / 52 weeks
  • Maximum entry age: 64
cirencester friendly

Cirencester Friendly

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.

  • Maximum coverage: 65% of your pre-tax salary, up to a maximum of £65,000 per year.
  • Deferred periods: Day 1 or 4 / 8/ 13 / 26 / 52 weeks
  • Maximum entry age: 54
the exeter

The Exeter

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.

  • Maximum coverage: 60% of your gross salary up to the first £100,000 and 40% of any additional income.
  • Deferred periods: Day 1 / 1 week / 4 weeks / 8 weeks / 13 weeks / 26 weeks / 52 weeks
  • Maximum entry age: 59
holloway friendly

Holloway Friendly

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.

  • Maximum coverage: 60% of your gross salary up to £100,000
  • Deferred periods: Day 1 / 1 week / 4 weeks / 8 weeks / 13 weeks / 26 weeks / 52 weeks
  • Maximum entry age: 59
legal & general

Legal & General

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.

  • Maximum coverage: 60% of your annual income before tax, up to a maximum of £200,000 per year.
  • Deferred periods: 4 /13 / 26 / 52 weeks
  • Maximum entry age: 60
liverpool victoria

Liverpool Victoria

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.

  • Maximum coverage: 60% of your annual income before tax, up to a maximum benefit of £12,500 per month
  • Deferred periods: 1 month / 2 months / 3 months / 6 months / 12 months
  • Maximum entry age: 59
royal london

Royal London

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

  • Maximum coverage: 65% of the first £15,000 income and 55% of the remainder, up to a maximum of £250,000 per year
  • Deferred periods: 4 / 8 / 13 / 26 / 52 weeks
  • Maximum entry age: 59
Shepherds friendly

Shepherds Friendly

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.

  • Maximum coverage: 70% of income up to £49,000 per year
  • Deferred periods: Day 1 / 1 week/ 4 weeks / 8 weeks / 13 weeks / 26 weeks / 52 weeks
  • Maximum entry age: 60
Vitality

Vitality

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.

  • Maximum coverage: 60% of your earnings capped up to £2,500 per month and 50% of any earnings above, up to a maximum of £16,666 per month
  • Deferred periods: 1 week / 1 / 3 / 6 / 12 months
  • Maximum entry age: 59

Getting Income Protection Advice

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.

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 2252 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

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 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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