Income Protection Insurance-how much do you pay?

aliasojo

Just been looking at new short term Income (not mortgage) Protection insurance for an early 40's person, which would provide £1500 per month for 12 months in the case of ASU and I'm shocked at the kinds of monthly payment figures quoted.

They range from £60 to £112. This is for 30 days back to 0 quotes.

Is this really the cost of this type of cover? I had expected between £20 and £30. Am I being unrealistic or am I looking in the wrong places?

Credit-Crunched

aliasojo wrote: »

Just been looking at new short term Income (not mortgage) Protection insurance for an early 40's person, which would provide £1500 per month for 12 months in the case of ASU and I'm shocked at the kinds of monthly payment figures quoted.

They range from £60 to £112. This is for 30 days back to 0 quotes.

Is this really the cost of this type of cover? I had expected between £20 and £30. Am I being unrealistic or am I looking in the wrong places?

You need to differentiate between Income Protection and ASU

IP will pay you until a nomniated age i.e 65 and is generally much more detailed underwriting and therfore more worthwhile.

ASU is the 'cheap' option that will usually cover 125% of your mortgage payments for up to 12 months.

I pay £52 a month for ASU cover paying £1,800 for 12 months, I took it as I was after Unemployment cover as my main need. No company was offering it standalone

kingstreet

Sounds about right.

I normally use £6 per £100 for ASU with a 30 day back to day 1 option when I'm estimating cost.

Age isn't a factor in ASU premium calculation. It's simply the benefit amount, benefit period (12/24) and "waiting" period which matters.

Tailor the benefits to how long your employer would pay you in the event of illness. For example, public sector workers may get 6mths full pay/6 mths half pay. In that case, I'd do Unemployment cover only with Disability/PHI cover with a 12 month deferred period.

This tends to give better cover at lower cost. Particularly for lower-risk occupations.

InsideInsurance

Credit-Crunched wrote: »

You need to differentiate between Income Protection and ASU

ASU is the short term version of income protection. PHI is the long term version.

ASU is the same as PHI in that it is normally maxed out as a percentage of your income and has not 125% of your mortgage - otherwise those that rent could never buy it.

To the OP - the rates sound in the right sort of ball park but I am sure a few of the IFAs will have more experience of current pricing

dunstonh

There is no way to compare income protection pricing without knowing a lot more details. Income protection (PHI) effectively comes in budget, standard and comprehensive cover and can have options like own occupation or any occupation. Pricing can be affected by the occupation class as well as terms required.

ASU on the other hand is mostly useless as income protection unless you cant afford proper income protection and are using it as a budget option. There are also a number of budget ASU companies out there who are budget because of that they lop off on coverage or claims handling to get that premium down.

aliasojo

Credit-Crunched wrote: »

You need to differentiate between Income Protection and ASU

Income Protection

iprotect Income Protection Insurance is designed to pay
you up to 65% of your gross income if you are unable to
work due to accident, sickness, redundancy or other
involuntary unemployment




http://www.iprotectinsurance.co.uk/products/income-protection/

aliasojo

The main purpose is primarily unemployment/redundancy cover.

Credit-Crunched

InsideInsurance wrote: »

ASU is the short term version of income protection. PHI is the long term version.

ASU is the same as PHI in that it is normally maxed out as a percentage of your income and has not 125% of your mortgage - otherwise those that rent could never buy it.

To the OP - the rates sound in the right sort of ball park but I am sure a few of the IFAs will have more experience of current pricing

I was referring to mortgage or rent ot monthly outgoings.

I think you will find that most ASU policies will pay up to 125% of your rent or mortgage.

IP policies are desigend to replace an income up to a certain threshold and not specify what you spend the money on.

The two policies are worlds apart so a comparision was merely provided in its simplistic form.

If Unemployment cover is your main concern than an IP policy would be pretty much useless on the whole

aliasojo

Credit-Crunched wrote: »

IP policies are desigend to replace an income up to a certain threshold and not specify what you spend the money on.


If Unemployment cover is your main concern than an IP policy would be pretty much useless on the whole

I don't understand why?

Our circumstances are not particularly straightforward and presently we pay rent and a mortgage. It seemed fitting to consider a product that paid x amount so that we could administer it as we saw fit.

InsideInsurance

aliasojo wrote: »

I don't understand why?

Because they have the miss perception that IP = PHI only and ASU is not a form of IP

dunstonh

The problem has come about as some of the payment protection companies decided to start calling their PPI plans income protection as PPI has now got a stigma attached to it.

If you want a PPI plan then that is fine. However, dont mix it up with proper income protection policies as they are worlds apart in quality and coverage. Dont fall for marketing by the PPI companies making out any different either.