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How much is income protection insurance?

How much is income protection insurance?

26 Jan 2021

Searching for a straightforward answer about how much Income Protection Insurance will cost you monthly? Sorry to disappoint you, but the only way to do that is to get a quote. We could give you ranges, but none of those options may be true for you. Income Protection prices, like the prices for most life protection and insurance products, will depend on your personal situation. 

For example, someone in their 20s with  no dependents and no mortgage to pay will have different needs than someone in their 30s with a family and a home. There is no one size fits all and your monthly payments (also known as premiums) will depend on a number of factors, including:

  • Age
  • General health; including your weight, smoking status, your current health, and yours and your family’s medical history
  • Lifestyle and job (some hobbies and jobs carry a higher risk than others so may result in higher premiums)
  • The amount you want to be covered for

How does Income Protection work?

Let’s start with the basics. In a nutshell, income protection is designed to give you a regular replacement income if you become ill or injured. Think about it - this could happen to anyone. In fact, according to the ABI (Association of British Insurers), a staggering one million workers a year find themselves unable to work due to a serious injury or illness. Income protection is there to cover you if you find yourself part of this one million. 

Income protection will pay a percentage of your normal salary - usually between 50% and 70%. This is paid out monthly, in place of your salary, instead of in a lump sum, and continues until either:

  • You can go back to work
  • You reach state pension age and retire
  • Your protection period ends
  • If you stop paying your premiums and your policy ends
  • You die during the period of the claim. 

So what will Income Protection cost for me?

The cost of this policy will be based on your circumstances, as well as the level of cover you need. For instance, when taking out a policy, you’ll agree to a ‘deferral’ period. This is the period of time between making a claim and when the benefit begins to be paid, so it’s important to check  whether you’re eligible for sick pay from your employer and how long that would sustain you for. The longer the deferral period, the cheaper the premiums.

When deciding how much cover you might need, you need to weigh up the cost of a policy against the risk of being uninsured. Could you cover essential costs like mortgage/rent, food, fuel and car payments, as well as the price of day-to-day living, if you were on sick pay or living on your savings?

Weighing up these costs will also help you figure out how much of your salary you need covered a month, which will also play into how expensive your policy is. 

If you’re curious about what your options are, contact us here at LifeSearch. We have extensive experience and access to the market, so we’re best placed to help you find a policy that suits your circumstances and your budget.

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