Am I overpaying on income protection

[autumnhasbroken]

Hello, I have been reviewing my outgoings and realised how much my income protection has gone up It's now over £100 a month for a benefit of approx £1250 pcm until age of 65. I'm 54. Does that sound a lot? I am not sure I can afford it any more.

Doesn’t sound massively out, ask a financial adviser to cost up a new policy. A lot will depend on medical ailments you may have

That’s astronomical! I pay £177 a month for £9500 cover and I’m younger than you by a decade.

Cost of IP increases with age as the likelihood of a claim increases with age. Also depends on the deferred period selected and if it pays out for a set period of time eg 1 or 2 years or until selected retirement date.

Do you have life assurance through your employment? Worth checking if you do as it may cover your mortgage. It’s a bit of a hidden benefit in some bigger companies (we’ve got it ranging from £30k pay out to 3x or 4x your salary). When i remortgaged, I chose not to have income protection. I’d only get it now if I moved jobs and didn’t have life assurance.

Mine doesn’t increase, and pays out until state retirement age. Also covers me against not being able to work in my specific job, not just any job.

Life assurance for a multiple of salary pays out when you die or terminally ill not just unable to work.

@welshweaselif you have £9500pm cover for £177pm with no increase that is a really good option. IP is massively underrated and people sadly get very confused with it. I try to encourage all my clients to take it up where affordable as majority of the U.K. cannot afford to be ill for more than 2 months and statutory sick pay is woeful.

I pay £42pcm (fixed between now age 49 and state retirement age 67 - for income of £2600pcm. I figured that was ok: I was told it massively increases if you take it out after age 50

Do you belong to any workplace /industry associations or trade union? Sometimes they can offer better rates.

Thanks all, I am well covered for life assurance - no worries there. It's more not having anything to compare it to for income protection - it's not something that I often see discussed.

Current policy pays out til 65 and have a six month period as well before it kicks in - my guess is that given my age it would probably be more expensive to change. I know going through the assessment process for a new policy is very time consuming so just trying to understand whether the current set up is reasonable. If so, and that is just the cost, I will have to think about whether it is still affordable now the kids are off to uni.

It has gone up a lot recently and they seem to be adding all kinds of bells and whistles, physio, online GPs etc which I am less interested in.

@autumnhasbrokenif you have no pre-existing conditions it is definitely worth a look especially with a 6 month deferral in place. Clean health record for that level of cover should not need GP report

Thank you - that is exactly the advice I was looking for!

@autumnhasbrokenim very bored and doing some work anyway I’ve run a quick comparison report and for what you have stated above you could be looking at £32-40pm. With a clean application crucially.

Hi OP, is the benefit index-linked to RPI by any chance? It could explain the increase in premiums.

Did you take this out a long time ago?

This seems way too little and I can only imagine you have a time limit on any claims of maybe one or two years. It’s almost impossible that this would pay out to state pension age.

I pay just over £100 for mine - I am not sure what it pays out per month, it goes up every year, but last time I looked, it was just over £2000; and the cost includes critical illness and death cover on my remaining mortgage (this reduces as my mortgage goes down). I took it out twenty years ago though. I did get a comparison done about ten years ago and could not find anything better.

@messybutfuntook it out a long time ago, but increased the payout about 2 years ago (so essentially a new policy). I’m NHS so get 6 months full pay and 6 months half pay so there is a deferral that matches that. Pays out if I am unable to work as a surgeon, until age 67. No exclusions.

Oh wow, thank you. It will definitely be worth my running it again then.

Come to think of it when I took it out when I was pregnant (gulp) we went through a broker as there weren't really comparison sites then. I'm hoping to change jobs soon so it will be especially important as I may not get the rather cushy six months sick pay that I do now...

I was using IFA comparison software :-)