Income Protection Insurance

[dailyconniptions]

I'm 55 and have recently spent HOURS trying to sort this out, for cover until my 67th birthday when the pension kicks in.

I've finally gone with Royal London and the premium is £64 per month, but this doesn't increase over the term, apart from in line with the usual RPI

Is this ultra expensive or pretty average would people say? Yes I know it depends on many factors but I'm just hoping for a bit of reassurance! I'm on NMW in my job. Thanks in advance. 🙂

Thank you so much. That's reassuring to hear that it sounds a reasonable amount. Having already got savings which I add to every month, plus OK pensions, I feel IP is the safest thing to do to make sure I'm covered. Yes I only have a modest income from my job but I have pretty low living costs and fortunately no rent or mortgage.

I would also strongly recommend people take out a good critical illness cover. It paid me a large enough (at the time, but had I known my future I would have doubled it lol) amount that I could pay off my mortgage and not worry about money while I was treated (for cancer). Many times I had thought about cancelling it as I was in my early 30s and in good health, never dreaming I’d have cancer before I hit 40.

Thank you so much for replying. I hope everything is much better for you now.

Thank you. This was thirty year’s ago (I still get regular check ups). I can’t tell you how many times I’m still so thankful I didn’t cancel the dd.

How will that cover my living costs if I fall ill next year and can never work again?

If you fall ill next year you can access your pension pot. I'm not sure why you're telling us you have a few pensions but don't want to access any of them until state pension age.

I took out IPI aged 40 at £50 pcm after treating a man who was knocked off his bike, was going to recover well but was going to need at least a year off work, likely more. At the time I was the breadwinner and cycling to work every day. I looked at Critical Illness as well but it was much, much more expensive and I didn’t have the cash.

The policy will pay out 1300 a month in the ‘right’ circumstances until I’m 65. Like you, it would pay the important bills and keep my life roughly similar until my pension kicked in. I still think it was a good decision. My circumstances are different now but £50 a month for the next 8 years will mean I’ve paid them a total of another £4800. If it had to pay out I’d get that back within 4 months. Worth it to me. Yours sounds a reasonable cost.

Just a word of warning. My ex had a salary protection cover and was unable to work due to sickness for a while. The insurance company made him jump through hoops every single month to claim (had to have updated sick note etc and fill in new claim) then it only paid out for 12 months! Wasn’t worth the hassle. I would defo check the policy you’ve been offered will pay for years and years until you are 67.

Because they are pretty small (23k is the largest) and in no way would they pay enough to take me from age 56 to the end of my life. It will be essential for me to have the state pension in addition, to make retirement possible from age 67 as it is. So the pension is incomparable to IP insurance.

If the pension had been an option, I wouldn't have even started looking at IP insurance.

What would you otherwise have been spending this £64?

General savings.

What are you currently saving into? S&S ISA, Cash ISA?? Are you currently in an employee pension scheme?

OP I'm mid 50s, currently on long term sick leave with cancer and getting ESA and PIP. I can't see why you wouldn't in similar circumstances.

Hi, I'm so sorry to hear that. I hope things are improving for you.Might I just ask though, if you don't mind, is it enough to live on, to pay all your bills?

Is 50-70% of NMW enough for you to live on and pay all your bills?

because that is what you earn
and that is what you’d receive from income protection

But if you put the £64 into your pension you could add another 10k or so which you will definitely benefit from. The income protection insurance is a gamble you may not claim on.

Hi OP I just turned 50 and have a royal London policy at 42pcm. It would start paying £2500 pcm after 2 months of no work for 2 years only. I own my flat so would not necessarily get benefits to cover mortgage. I think it’s a good idea. I was encouraged to take it before age 50 as prices shoot up after age 50. Amount pcm stays the same. I may stop it around age 57-60 as can access pension then

You are doing the right thing. I pay £60 a month.

The people saying to pay the money into your pension, have no idea how life can change in a moment. I have asked myself many times why am I paying these premiums. I have had every penny back and more very recently. Everyone knows that the policy will not pay out for the majority of people. You are covering against risk. The people saying 'add it to your pension' believe this is unnecessary cover. That's exactly how it feels until you need to use it. You will not want to be making permanent decisions about work and pensions if you become seriously ill.

I pay more than that for my income protection (but I also earn more, so fair enough!). Ive also had it longer, about 20 years. It stops when Im 60 i think.

Like you Im single so no partner to supprt me. People saying you get sick pay are missing the point - you dont get it forever. My employer pays full pay for six months then half pay for another six months. If you have a long term condition, then what? Universal credit for a single person is very low though to be fair I dont know about ESA or PIP.

And yes I have a pension which I can now access but again at a lower rate (to compensate for it being paid out for longer) than if I wait til pension age (when I can also access the state pension).

I also have savings.

I'm currently receiving £240 per week so would that cover your bills? You have to bear on mind you might not have PIP awarded at the same rate. It depends how incapacitated you are.

I already had income protection and critical illness cover via work but bought my own income protection insurance a few years ago because I was worried about redundancy and could not afford to survive on savings while looking for a new job (my partner had to do that for 10 months). Paying £150 a month for £4500 x 12 months (yes, it only pays out for a year). It gives me huge peace of mind every time there is a fresh wave of redundancies announced at my workplace and other companies in my sector.

It's obviously always going to be about risk, but I am one year older and putting the majority of my savings into a pension. You get 25% added by the government, so you would get £84 pm into it. By the time you're 67, it'll probably be worth another 20k!

I am in your position, mortgage free, some savings. If youre worried I would do 2 things - put some of your savings into pension (so you have less than 16k in savings). And if you're not already on it, start HRT. The one biggest thing you can do to keep healthy and have a good quality life/healthspan.

Oestrogen is anti inflammatory and everything starts to go wrong when we lose it. Protects against heart disease, osteoporosis, diabetes, dementia, bowel cancer etc. Evidence now shows that HRT is better than statins & BP drugs at preventing cardiac disease & events. And it's a licensed treatment for osteoporosis.

She would still get PIP even if she had income from her policy (unless the rules are changed in the future to make it means tested)

It would be very tight to cover everything on that, I must say. Thank you so much for answering.