Income Protection Insurance: Costs

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Article published on 9th July 2008

Income Protection Insurance policies can be quite expensive over a long period of time due to the specific guarantees of the policies offered.
Also, if you choose a 'suited occupation' or 'any occupation' policy option over an 'own occupation' policy will more than likely reduce the cost of your premiums as well.

It terms of cost it pays to be aware of the following points:

Whether you are male or female can have an effect on the amount and type of policy available to you.

Your age from when you first take out your policy will also have an effect as older people tend to get charged at higher premiums due to the fact that they are a bit more likely to contract debilitating illnesses.

Your existing level of health is taken into account. If you already have health problems you may have to pay more for your cover or in the worst cases you may even be refused cover, depending on the type and seriousness of your illness.

Your current job is also a factor. If you work behind a desk the risk is less than if you work with heavy machinery or are a labourer of some sort. Those with higher risk jobs are likely to have to pay a bit more.

Your lifestyle is also often taken into account, and if you are deemed to have an unhealthy or high-risk lifestyle your premiums will likely to be higher. So, for example, smokers and avid mountain bikers are more likely than the average to either become ill or get injured, so they will generally have to pay more.

Your deferment period. As discussed previously in these articles, Income Protection Insurance premiums go down the longer the deferment period you agree to. So the longer you can wait before claiming on your insurance if you cannot work, the cheaper your premiums will be - once you claim, there is a delay before payments start. You always choose how long this period will be for.

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