How Much is Income Protection Insurance?

One of the many questions asked by clients wishing to protect their families against loss of income is: “How Much is Income Protection Insurance?” As it is, the cost of income protection insurance premiums depends on the chosen cover level and various other factors.

Factors Affecting Income Protection Premiums

The cost of income protection is determined by taking the following factors into consideration:

Cover Level – While lower amounts can be covered, income protection benefits can be set at up to 60 per cent of the insured individual’s gross income. The minimum cover to get should be enough to pay regular bills (food, utilities, mortgage, etc.). The higher the agreed cover level, the higher monthly premiums will be.

Extent of Cover – Income protection policies may cover accidental injuries, illness and/or redundancy (although most insurers do not offer the latter). Premiums will reflect the chosen extent of cover.

Deferred Period – Income protection policies invariable have a built-in deferred period. Typically ranging from one to three months (although it can be longer), this is the period between the insured person first becoming unable to work and benefit payments commencing. The shorter the deferred period, the higher premiums will be.

Guaranteed Premiums – Insurers may increase premiums of standard income protection policies over time, but policyholders can have guaranteed premiums (i.e. premiums remain the same for the policy’s full term). This may, however, result in higher premiums.

Medical History – People applying for income protection policies are required to complete a health questionnaire to help set premiums. If the applicant has a history of health problems, premiums may to be set at a higher rate to reflect their increased risk of illness.

Age – The older an individual is, the higher the premiums are likely to be, as older people are considered more likely to become ill than younger people. A man aged 50, for instance, may pay £50/month for a policy that is payable to the age of 65 with a cover level of £1,500/month and a deferred period of twelve weeks, whereas a man aged 30 could pay just £25/month for the same policy.

Occupation – Some occupations carry a greater risk of illness and/or injury. The higher the risk, the higher premiums will be.

Smoking – Due to their increased risk of developing smoking-related illnesses, smokers will also have to pay higher premiums.

In addition, premiums can also vary significantly between different insurers.

So, How Much is Income Protection Insurance?

While policies currently start at approximately £10/month, most policyholders now typically pay premiums ranging between £40 and £80 per month for their income protection insurance.

Considering all the factors involved, finding the most suitable policy to meet your family’s specific needs while keeping the cost of premiums at a level that is affordable can be a complex and occasionally somewhat perplexing process.

Spectrum FA

Our experience, know-how and access to leading British insurance companies’ policies enables us to guide you through this process and recommend a policy that meets your specific needs at the most affordable premiums.

Call us on 01279 315 013 today for more details and/or to arrange for a free, no-obligation review of your circumstances.