Income Protection Cost Calculator

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13-02-2021

Income Protection is an insurance policy which pays out a monthly benefit if you can’t work due to accident or sickness.

The payout is a proportion of your gross (pre-tax) earnings and is tax-free. You can use it however you need to maintain your living standards while off work after an illness or injury.

Our Income Protection Calculator is designed to help answer the two biggest questions our clients have when taking out cover:

  • How much Income Protection cover do I need?
  • What does it cost?

How Much Income Protection Do You Need?

This ultimately depends on your financial circumstances. As mentioned, you can cover between 50% and 70% of your gross earnings, while some insurers allow you to protect a higher benefit in monetary terms than others.

Think carefully about how much money you’ll need each month. Key essential outgoings most of our clients seek to cover include their:

  • Mortgage / rent
  • Utilities and other bills
  • Council tax
  • Loans / credit card repayments
  • Childcare costs
  • Weekly food shop.

However, you can also cover income you use for discretionary expenditure, such as eating out or gym memberships.

If you already know how much cover you require you an use our calcualator to compare quotes from all the leading UK insurers including Aviva and Vitality 😊

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Calculating The Cost Of Income Protection

Ultimately, this depends on you, your needs and your circumstances. Insurers calculate Income Protection premiums based on both personal and policy factors.

Personal Factors

  • Age
    The older we get, the more likely we are to develop an illness / injury. Insurers therefore charge older adults more for Income Protection.
  • Health / medical history
    Insurers may increase premiums if you have a pre-existing condition or an adverse medical history. Alternatively, they may simply exclude that condition outright.
  • Smoker status
    Most, although not all, insurers charge smokers more due to the health risks of smoking.
  • Occupation
    As mentioned, some jobs are riskier than others and you pay more for coverage as a result.

Policy Options

There are also policy choices you must make when you take out cover. These all affect the cost of premiums and include:

  • Level of cover
    The benefit you’ll get each month if you make a claim. The higher your benefit, the higher your premiums.
  • Payout period
    Budget, Short-Term Income Protection is a cheaper option. It pays out for up to 1, 2 or 5 years per claim and then stops, even if you still can’t return to work. Long-Term Income Protection, meanwhile, pays out right up until retirement if you can’t ever work again. However, it is the more expensive option.
  • Deferred period
    You usually align your deferred period with any sick pay you get or how long your savings would last. The longer you can stretch you deferred period, the cheaper your premiums.
  • Cease age
    Your age when your policy ends. You typically align this with your expected retirement age. Many insurers offer cease ages all the way up to 70. However, the older your cease age the more expensive your cover.

Example Premiums

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

To compare Income Protection quotes for these individuals, we’ve assumed they are:

  • In good health
  • A non-smoker
  • Applying for a £1,500 per month benefit
  • Looking for cover up to their expected retirement at age of 65
  • Looking for a policy which will pay out long-term
  • Seeking an 8 week deferred period.

Manual Role

Office Role

Age

Plumber

Accountant

25 years old

£33.15

£24.05

35 years old

£38.85

£35.31

45 years old

£60.71

£58.61

Who Are The Top UK Income Protection Insurers?

Ultimately, the best Income Protection for you depends on your circumstances.

With a range of insurers to choose from, it’s therefore important to compare Income Protection Insurance quotes from every major provider to find the best deal. The insurers we get quotes from include:

Our whole of market access and experience offering advice mean we can match you with the best provider and the best policy.

Additional Benefits

Another important area of comparison is the additional benefits on offer from various insurers. These are services available, almost always for free, alongside your policy.

Insurers offer these benefits with your wellness in mind. They’re there to help reduce the chances of you needing to claim or to speed up your recovery if you do fall ill.

Depending on your insurer, additional benefits may include:

  • Remote GP appointments
  • Medical helplines, offering convenient telephone access to trained doctors and nurses for advice on minor medical ailments
  • A fixed number of physiotherapy sessions per year (either online or in person)
  • A fixed number of counselling / cognitive behavioural therapy sessions per year (either online or in person)
  • High street discounts
  • Discounts on gym memberships / fitness trackers
  • Hospitalisation benefit, paying out a cash benefit each day you spend as an inpatient in hospital
  • Second medical opinion service, providing access to world-leading medical experts to offer a second opinion on a diagnosis or course of treatment.

Many such services are available not only to you as the policyholder but also your immediate family, such as your spouse / civil partner or dependent children.

How Do You Compare Income Protection Plans?

Income Protection is a very competitive market. There are many insurers, some of which have more than one policy. You’ll have to compare each one carefully to ensure you get the right cover for you.

Furthermore, each insurer offers variations of cover. For example, some key differences between policies and providers include:

Level of Cover

Depending on your insurer, you can protect between 50% and 70% of your pre-tax earnings.

Insurers also have a different maximum monetary figure you can receive as a benefit each year. This can be as low as £45,000 or as high as £250,000, so check carefully, especially if you’re a higher earner.

rauri taylor, independent protection expert at drewberry

It may be tempting to simply go for the maximum figure you can insure. However, this will mean higher premiums.

Instead, examine your essential outgoings and calculate how much Income Protection you’ll need to cover your core expenses.

Rauri Taylor
Independent Protection Expert at Drewberry

Deferred Period

Your deferred period is how long you wait between falling ill and the insurer paying out. You choose this when you set up the policy.

Some insurers offer better rates if you need a shorter deferred period (e.g. 1 week), while others are better if you can wait out a longer deferred period (e.g. 12 months).

Smoker Neutrality

The health risks of smoking mean many insurers charge smokers more. However, this isn’t the case for all insurers — some are what’s known as ‘smoker neutral’. Smokers may be better off choosing one such insurer.

Additional Benefits

Insurers often provide an array of additional benefits (usually free) alongside your policy. These are focused on your wellness and might include remote GP appointments, counselling sessions and a hospitalisation benefit, which pays out a set amount per night if you’re hospitalised.

Occupation Risk Preference

Some insurers offer better rates for manual workers and focus their attention on clients in more physical roles. Others, meanwhile, prefer those in lower risk roles, such as office workers.

The difference is because manual workers face a higher risk of workplace injury than office workers. Moreover, you’re more likely to be unable to do a manual job than a desk-based role following an illness / injury due to the physical nature of manual work.

Your occupation therefore plays a big part in determining which insurer is the best option for you.

Compare Income Protection Quotes & Get Expert Advice

Now you’ve got a clearer picture of how insurers calculate the cost of Income Protection, and know how to compare insurers, why not pop your details into the Income Protection Calculator below?

This will work out the cost of protection for you.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to issues as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

For help and fee-free expert advice, don’t hesitate to give us a call on 02084327333 or email help@drewberry.co.uk.

I’ve held a policy with Drewberry for several years now. They are always friendly, insightful and offer great service.

Dan Pettitt
13/01/2021
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