How Much Does Income Protection Insurance Cost?

While most people aim for the maximum amount of cover for the minimum cost, the actual cost of income protection insurance isn’t as simple as that.

Both personal factors and policy choices shape it. Note that long-term policies usually cost more than short-term ones.

With income protection cover, you can choose how long you wish to be paid, how much you want to be covered, and how fast you can receive the money.

The cost factors can be divided into two categories: policy-related and personal. Policy factors are how comprehensive you want your cover to be.

This includes monthly coverage, the waiting period for payment, premium types, and more. You cannot change personal factors because they are individual to you and your situation. 

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Policy Factors That Influence The Price Of Cover

You can change a few things when choosing an income protection plan, which will either drop or increase the final price.

These factors include:

• Level of cover: You can select how much money your insurance will pay you monthly. Usually, it is up to 70% of your gross income. 
• Deferral period before payout: There is something called the waiting time. It is a period between when you cannot work due to an illness or accident and when the insurer pays you the first benefit. You can have a short deferral period of one month or choose something later. 
• Cease age is the insured age at which the income protection insurance ceases. You can set the cease age as an estimated retirement age, between 65 and 70 years old.
• Type of premiums: The protection premium you pay every month is divided into two types:
  • Age-banded premiums: An age-banded policy will increase premiums as you get older.  
  • Guaranteed premiums: As the name suggests, these premiums are guaranteed or fixed. There are no fluctuations, and you know exactly how much you owe monthly.  

Here Are Some real-life examples

Age	26-year-old, £1,600 monthly coverage	£8.67
	54-year-old, £1,600 monthly coverage	£32.01
Occupation	27-year-old working in an office environment	£23.04
	25-year-old in a manual role	£38.53
Health	Healthier individuals	Lower premiums
	Pre-existing conditions	Higher premiums
Coverage Length	Short-term policy at age 26	£6.14
	Longer-term policy at age 26	£8.27
Deferred Period	Longer deferred period	Cheaper premiums

Personal Factors

Personal factors are mainly the demographic information you provide, so we can present you with options from the leading life insurance companies to compare. 

These factors include: 

• Age: As you get older, your risk of illness increases. As a result, the premiums are higher. 
• Occupational risk class: The riskier your job is, the higher your premiums are. That is why firefighters would pay more than school teachers. 
• Smokers or nonsmokers usually pay a higher premium because they are more vulnerable to serious illnesses. 

Medical history: A pre-existing medical condition means you are more likely to fall ill and be unable to work. This can also add to your monthly premiums.

How to Choose Income Protection Insurance?

To learn which income protection insurance plan is most suitable for you, it is highly recommended to have an initial consultation with an insurance broker to explore all options available.

Experts at Insurance Hero will listen to your situation, ask you all the relevant questions, and present you with the insurance plans you are eligible for. 

If you cannot afford to pay for insurance that covers your whole salary, you can always consider a cheaper option with slightly less coverage.

This way, you will have a safety net if you lose your salary due to an accident or illness.

When getting insurance, you will face another decision. Most types of income protection insurance are short-term.

It means you will be paid only for a short period while on sick leave. This can be up to 2 years, depending on the policy. 

For some, it should be sufficient time to recover and return to work. However, if you require more, you can find long-term insurance protection policies with five or more years of salary replacement.

The cost of income protection that pays an equivalent salary up until the moment you return to work is considerably more expensive than a short-term plan. 

FAQs

How can I get an income protection quote? 

If you are interested in the cost of income protection insurance, you can receive a no-obligation quote and a call from one of our experts to discuss your case.

Later, you can compare plans from the leading life insurance companies. 

You can choose cover for yourself or for you and your partner together. Then, you need to choose what type of insurance interests you the most, the amount of coverage, and the length. 

Are there alternatives to income protection insurance? 

Yes, you could consider getting mortgage payment protection or redundancy protection. 

Mortgage payment protection is a form of cover you receive when you lose your job and are unable to pay for mortgage payments due to this.

Redundancy protection is a tax-free monthly cover you receive when you unexpectedly lose your job. 

What information should I provide to obtain income protection insurance? 

You will need to share information such as your age, occupation, smoking status, and health history. It will help determine the final cost of income protection insurance.

It is best not to hide anything from your insurer and honestly answer the questions about medical conditions. 

Is there income protection insurance for self-employed individuals?

Self-employed people who don’t have the option to receive a monthly income from an employer when sick can also buy income protection insurance.

You can receive monthly cover of up to 70% of your gross income until you are physically ready to return to your work.

Other types of cover: