Why It Pays Not To Delay On Income Protection

Taking out income protection, or any other insurance for that matter, can often start off with good intentions, possibly spurred on by a job change, new mortgage or birth of a child and maybe we have an initial look but get don’t quite get over the finish line, leaving it on the ‘to do list’ for another day.

However, there can be significant advantages to taking out cover sooner rather than later, which include:

• Locking in lower premiums by taking out cover at a younger age
• Potentially even paying lower total premiums for a longer period of cover
• Avoiding policy exclusions by taking out cover before suffering medical conditions

Lock In Lower Income Protection Premiums

For all but the most manual of occupations it is usually possible to take out a policy with premiums that are fixed over the life of the policy. This is often the most cost effective way of setting up cover for the long term as the insurer cannot increase your premiums as a result of their claims experience.

As the risk of needing to claim increases with age so does the entry premium the insurer charges (which is then fixed over the policy term with ‘guaranteed premiums’).

Here is an example of a non-smoker looking to cover £1,500 per month with the policy paying out after 13 weeks of incapacity. The plan runs to age 65 and could payout until that age if the client couldn’t return to work.

As the chart shows, premiums rise significantly with the entry age to the policy. It therefore makes sense not to leave taking out cover on the ‘to do list’ for too long as your policy could end up costing a lot more. In other words, it often makes sense to lock-in your premiums at as young an age as possible.

Avoid Future Policy Exclusions And Premium Loadings

When taking out income protection you will disclose medical information to the insurer (we complete applications for our clients over the telephone) and based on that information the insurer will decide if they need to place an exclusion on the policy or increase the premiums charged to reflect a higher level of risk.

A big part of our job as independent advisers is speaking with the underwriters at all leading insurers in order to try and obtain the best terms for our clients.

The simple reality is that every day there is a chance something could happen to our health, whether that is due to an accident or illness, and therefore it makes sense to take out cover before something does happen and you potentially end up with an exclusion or increased premium, or even worse the insurers decline offering you cover at all.

Unfortunately, our 2014 Protection Survey found that 1 in 6 people look for incapacity protection when they are already ill or injured, and in a lot of cases it is too late to take out cover.

Potentially Pay Lower Total Premiums

The section above showed how much the premiums can go up with entry age, indicating that it can pay to take out cover earlier rather than later.

Naturally you would be paying the (lower) premiums for longer and be covered for longer, but one surprising outcome of some research we undertook in 2013 was that it can often work out cheaper in total by taking out cover earlier (you can see the research here).

In a large number of cases the total premiums you pay (i.e. monthly premiums multiplied by the total number of months your policy lasts) can actually be lower the younger you take out cover. Potentially being covered for longer for less is another reason why it could pay not to delay.

Get Expert Income Protection Advice

Taking out Income Protection can be a bit of a minefield. Our job is to make sure you have all the information and guidance you need to make an informed decision when it comes to setting up the most suitable financial protection.

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 3759 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.