Our Income Protection Calculator aims to answer the two biggest questions people have about Income Protection Insurance:
The benefit you receive from a personal Income Protection plan is entirely tax-free and can be used to maintain your living standards while you’re off work with an illness or injury.
Once the cover is live, if you fall ill or have an accident then your insurer begins paying out after an initial waiting period known as the deferred period.
Given the minimal level of Statutory Sick Pay and other government benefits available, many find they couldn’t live on state help alone if they couldn’t work.
As a result, more and more people are turning to Income Protection to provide them with stability and a guarantee of an income should they be unable to do their job.
According to consumer group Which?, Income Protection is the one policy every working adult should consider.
The cost of Income Protection depends largely on the amount of income you want to cover and how quickly you would like the policy to pay out after becoming too ill to work.
With regards to how quickly you want the policy to pay out it is best to align your deferred period with any sick pay entitlement or savings you have. The longer you can extend the deferred period the more cost effective your Income Protection premiums.
To calculate the amount of cover you need, consider your outgoings. The big bills are the obvious ones, such as rent / mortgage, utilities and groceries. However, you can also cover income used for discretionary expenditure, such as eating out or gym memberships.
Most insurers will allow you to cover between 50% and 70% of your income; it’s important to consider not simply insuring the highest amount possible but to carefully calculate how much cover you need to meet your core outgoings. This will keep premiums affordable.
To calculate the cost of an Income Protection Insurance you will need the following information:
EXPERT TIP 👌
Lengthening the deferred period and lowering your policy’s cease age are just two such ways of making a policy more affordable while still being appropriate for your needs.
The best time to consider getting Income Protection is when you’re young and healthy.
Policies are cheaper the younger we are as there’s a lower likelihood of us suffering an illness or injury. And if you take out cover while you’re healthy, there won’t be any exclusions on your policy or an increase in premiums due to your medical history.
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 calculate these Income Protection quotes we’ve had to make a number of assumptions, including:
Age at Application
Monthly Cost of Premiums
As you can see from the calculations, the cost of taking out Income Protection increases as you get older due to the increased risk of us falling ill.
The good news is that many insurers offer guaranteed premiums so you can lock in the price when you set-up your plan.
The level of Income Protection cover you need will depend on your monthly expenditure, but you’ve also got to consider how much you can insure.
As a general rule of thumb, you can insure between 50% and 70% of your gross annual income depending on your chosen Income Protection insurer.
Our experts can help you go through your living expenses to identify how much cover you need. It’s easy to take into account the obvious bills:
On top of this, you may also want to consider other expenditure, such as:
Once you’ve calculated your ‘core’ outgoings each month, the expenditure you simply can’t do without, you’ll usually arrive at how much Income Protection you need to calculate the cost.
It can be tempting to simply go for the maximum you can insure, but this will increase the cost and you may find you don’t need the entire benefit.
For example, if you’re not working costs such as commuting or leisure activities may no longer be applicable.
Independent Protection Expert at Drewberry
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’s 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.
Legal and General 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.
Liverpool Victoria offers free access to unique 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 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 sustain 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’ offering, 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 feel that Income Protection is one of the most important insurance products on the market. We all think to insure our homes and cars, but what about our income? After all, that’s what pays for everything at the end of the day.
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 Income Protection can be a bit of a minefield we have a whole team of expert advisers on hand to help answer any questions.
If you need any help please don’t hesitate to pop us a call on 02084327333 or email firstname.lastname@example.org.
I've had a professional relationship with Josh Martin, as an adviser, for around 5 years, now. I would fully recommend Drewberry to assist with your financial needs.