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Find out the top excuses for not buying income protection insurance

6 Reasons That Might Stop You Taking Out Income Protection

Income Protection Insurance is one of the most valuable protection products to purchase if you’re worried about how you would cope if you couldn’t work due to accident or sickness. For instance…

There are a lot of reasons people give for avoiding taking out Accident & Sickness Insurance. In the hopes that we may convince you to invest in this valuable protection product, we’ve busted some myths around the top 6 excuses that people use to avoid taking out Income Protection Insurance.

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Many people find themselves looking at income protection when it's too late and they're already out of work.

I Don’t Need Accident & Sickness Insurance

Many of us tend to have an optimistic outlook when it comes to our wellbeing, living by the mantra ‘it won’t happen to me’. However, most of the people out of work due to illness or injury probably thought the same.

With protection insurance, you won't have to worry about taking a break from work to recover.

Our Drewberry 2015 Protection Survey asked the public to estimate the chances of someone needing to be off work for more than 6 months due to ill health. The median result of our participants was that there is a 1 in 30 chance of needing more than 6 months off.

The real answer to this question, however, is that 1 out of every 10 people will need to take more than 6 months off during their working life to recover from an illness or injury. This means that the risk of being seriously ill or injured is 3 times higher than we perceive it to be.

There is a 1 in 10 chance that you will become severely injured or ill during your working life and require more than six months off of work. What you would do if the worst did happen and you were out of work for six months?

Risk of Incapacity

Raising Awareness of Income Protection Insurance

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The Cost of Income Protection Insurance is too Expensive

Following on from the points above, is it any wonder why Income Protection Insurance can be perceived as expensive if we all tend to underestimate the chances of needing to claim?

A suspicious mind might think that premiums are ‘expensive’ because insurers are making huge profits, but this generally isn’t the case given how competitive it is in the UK insurance market.

By talking to a financial adviser, you can tailor your income protection policy to adjust the cost of premiums.

It’s important to remember that when setting the cost of your Income Protection premiums that there are a lot of factors you can do to keep a lid on costs. The cost of a policy won’t be the same for everyone and with a bit of research you will find that a lot of available Sick Pay Insurance options are more than affordable.

If you’re worried about the cost of Income Protection, there are some aspects of your policy that can be adjusted to reduce the cost of Income Protection:

  • Your deferred period – the longer you can wait before receiving your benefit, the lower your premiums will be
  • Your policy’s cease age – a higher cease age means costlier premiums because of the higher risk of your claiming as you age
  • Your level of cover – do you need the maximum cover you’re entitled to? Consider your outgoings and see if you could pare them back in the event of a claim.
  • Your premium type – guaranteed premiums will stay fixed over time, whereas age-banded premiums will increase each year in line with your age.

The cost of your policy will also be affected by your own personal circumstances, such as your age, occupation, and your smoker status.

Jeremy Cornford, Independent Protection Expert at Drewberry

The insurer you choose to take out Accident & Sickness Insurance with will also have an affect on the cost of your policy. To see for yourself how affordable Sick Pay Insurance is, you can compare Income Protection quotes online and speak to our advisers.

Jeremy Cornford
Independent Protection Expert at Drewberry

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Robert
Income Protection
declined an income protection claim

What if my Income Protection Claim is Denied?

A common misconception that some people share is that insurers deny people’s claims quite frequently. The truth is that insurers rarely reject Income Protection claims and, when they do, it’s often because of an issue that wasn’t disclosed at the application stage, or due to outright fraud.

In our 2015 survey, we asked 2,000 UK workers what proportion of insurance claims they thought were paid by the top five insurers. We were surprised when results showed that people think that only 50% of these insurer’s claims are paid when the reality is very different.

Insurers
2014
2015
2016
Holloway Friendly

96%

96.9%

98%

British Friendly

96.7%

97.8%

97%

Shepherds Friendly

96.7%

97.6%

97%

Royal London

90%

94%

95.6%

Legal & General

93.9%

95%

94.4%

The Exeter

94%

94%

94%

Cirencester Friendly

94%

94%

94%

Vitality Life

96%

94%

Aviva

93.2%

92.4%

92.6%

Liverpool Victoria

85%

92%

90%

Zurich

93%

87%

85%

Aegon

92%

85%

85%

Income Protection claim payout rates have been consistently high among the top insurers. The top five insurers by claims payout rate all paid in excess of 94% of claims. The amount of successful claims is considerably higher than what our survey participants expected them to be, which shows that there is very little cause to worry that your claim will be declined.

Samantha Haffenden-Angear, Independent Protection Expert at Drewberry

One of the top reasons for these rare occurrences of claims being rejected is people misunderstanding what is covered by their policy or not providing the correct information when they apply. An adviser can help you avoid this by assisting with your application and explaining your policy to you clearly.

Advisers can also help you find a policy is tailored to cover everything you need, including ensuring that you have an Own Occupation Income Protection Policy, which offers the most comprehensive cover.

Samantha Haffenden-Angear
Independent Protection Expert at Drewberry

 

Insurer Claims Statistics

 

When choosing our personal protection we want to know it is going to pay out when we need it to.

By choosing a product or specific insurer from the menu below you will be able to view the claims payout rates for all of the main UK insurers for income protection, life insurance and critical illness insurance.

Insurer
2015
Percentage of Successful Claims
2016
Percentage of Successful Claims
2017
Percentage of Successful Claims
Critical Illness Insurance
Zurich
92%
90%
95%
Aegon
97%
95%
94%
Aviva
92.5%
92.3%
93.2%
AIG
91.4%
92.3%
93%
Legal & General
91.5%
92.6%
92%
Vitality Life
-
-
92%
Royal London
93%
92.2%
91.2%
Liverpool Victoria
91%
90%
88%
Friends Life
93%
-
-
Income Protection
Aegon
85%
85%
96%
Liverpool Victoria
92%
90%
96%
Vitality Life
-
94%
96%
Holloway Friendly
96.9%
98%
96%
Shepherds Friendly
97.6%
97%
96%
Legal & General
95%
94.4%
95%
Cirencester Friendly
94%
94%
94.7%
British Friendly
97.8%
97%
92.4%
Royal London
94%
95.6%
92.1%
Exeter
94%
94%
91%
Aviva
92.4%
92.6%
88.8%
Zurich
87%
85%
87%
Friends Life
84%
-
-
Life Insurance
Zurich
98.5%
98%
99%
Vitality Life
99%
99%
99%
AIG
92.2%
95%
99%
Scottish Widows
98.9%
99.4%
98.99%
Aviva
98.9%
98.9%
98.9%
Legal & General
97.9%
98.6%
98%
Aegon
98%
98%
98%
Royal London
98%
96.8%
97.3%
Liverpool Victoria
97%
98%
95%
Friends Life
99%
-
-
Incapacity Benefit and Income Protection

Do I Really Need Income Protection if I can Claim Benefits?

Employment & Support Allowance (ESA) is one potential source of income if you’re unable to work, but it’s very unlikely that you would live comfortably on benefits alone.

Depending on your circumstances, ESA will pay out an average of £73.10 per week.

This can seem like an absurd amount to live on when you consider that the average UK household expenditure per week  in 2016 was more than £500.

As you can see, for many people benefit payments could barely make a dent in their monthly expenditure, which is why Sick Pay Insurance is seen as a vital protection product for anyone that wants to protect their savings and income.

In 2016, the average length of Sick Pay Insurance claims for LV= was 7 years and 7 months and the average benefit payout was £14,695.

Steffan Alemanno, Independent Protection Expert at Drewberry

Benefits are rarely a full solution if you were forced out of work. Any savings you make on Income Protection premiums will likely be rapidly used up filling the holes in your finances, and savings won’t last forever.

For that reason, you may want to reconsider the viability of living on benefits and instead consider purchasing some highly valuable protection for your income.

Steffan Alemanno
Independent Protection Expert at Drewberry

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Why Do I Need Income Protection If I Get Sick Pay?

When deciding if you need Accident & Sickness Insurance, it is important to find out what your employer would provide you with if you needed to take time off of work due to illness or injury. However, even where sick pay is offered by their employers, many people may find that their entitled sick pay is not sufficient to support them while they are out of work.

Statutory Sick Pay – the minimum an employer has to pay you – stands at a weekly rate of £92.05 for up to 28 weeks. Some employers won’t pay you anymore than this, and it’s clearly a very small amount.

Some employers will choose to go beyond this and provide a level of full sick pay for a period of time. However, our 2015 survey showed that 24% of people did not receive any additional sick pay from their employer and received only the national minimum. As mentioned, if you do receive more sick pay than this, you can always increase your deferred period to lower the cost of cover.

Will Martin, Independent Protection Expert at Drewberry

Your insurer won’t pay Income Protection while you’re still receiving a full income from sick pay, which is why it is important that you know how much sick pay you are entitled to and for how long.

On the other hand, some generous employers may offer Income Protection as an employee benefit, which is definitely worth checking before taking out cover.

Will Martin
Independent Protection Expert at Drewberry

 

Occupation Definition Calculator

Make sure your Income Protection covers you in your 'Own Occupation'!

Too often individuals take out income protection without being fully aware of the incapacity definition on which their plan would pay out.

Will the plan pay out if I am unable to do my current job role? Or will it only pay out if I am unable to do any occupation?

robertharveyportraitround

If you do not already have income protection this tool should provide you with guidance as to what to look out for and to ensure you do not fall foul of a lesser occupation definition.

Robert Harvey
Independent Protection Expert at Drewberry Insurance

Your Occupation
 
Manual Work (%)
Business Mileage
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It's better to put your hard-earned savings towards your retirement than spend them all just to get by.

Why Have Income Protection Insurance When I Have Savings?

Some people believe that the money you save by not buying Income Protection Insurance can be put in the bank instead and used when you’re low on income.

While it is always worthwhile to save money, there is a good chance that your savings won’t be enough to support you if you are incapacitated. If you fall ill after only one month of saved premiums, for example, you would struggle to get by.

In our 2017 Drewberry survey, we asked participants how much they had in cash savings and 2 out of 5 adults had less than £1,000.

In addition, more than 44% of people had less than £200 left at the end of the month after covering their necessary expenses.

Considering that average weekly expenditure for UK households exceeds £500, these statistics mean that…

2 out of 5 adults wouldn’t last any longer than two weeks if they tried to live on their cash savings without any other source of income.

On the other hand, by paying premiums of, for example, £50 per month, you could have almost immediate access to monthly payments of 50% to 70% of your regular income. That will leave you the option to secure the rest of your monthly savings for your retirement.

Victoria swiftly helped in finding a solution which offered the required cover, with a more competitive premium.

Doug Harvey
05/09/2018
Speak to experienced insurance advisers at Drewberry to learn more about Income Protection

Get Expert Income Protection Advice

If you have been putting off purchasing Accident & Sickness Insurance for any of these reasons, then it may be time for you to reevaluate your situation.

Is Income Protection worth it?, for most working adults it is one of the most valuable forms of protection ensuring you are well prepared if you ever faced misfortune of being unable to work and earn an income in the future.

Tom Conner, Director at Drewberry

If you would like to learn more or would like to compare your options from the UK’s leading income protection providers then please don’t hesitate to contact our expert financial advisers on 01273646484.

Income Protection is one of the most valuable protection products you can buy, which is why we’re here to help you set up a policy that’s just right for you.

Tom Conner
Director at Drewberry

Compare Top 10 UK
 Protection
Insurers
 
Takes approx. 60 seconds
Type of Policy
Income Required
per
month
Date of Birth
Loading your options...
Thank you for using our Quote Tool
If you need some help, just call us!
T: 02084327333
Our in-house Experts are here to provide FREE impartial advice!
Our Experts can answer all your questions
Our Experts can send you more appropriate options based on your personal circumstances

Very important if you are either Self-Employed or a Company Director.

Our online quote tool is good but our Experts are better

Oue Experts have access to far more insurers and can often find a better deal offline.

Saves you time, let our Experts do what they are best at
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