Income protection - how much is reasonable for premiums?

beachbabe123

Hello, I (29F) have been thinking about Income Protection insurance as I have just purchased my first house in London.

I've got a quote from a broker for £46, but increasing to £71 if I opt out of the step/health tracking data (I would opt out as I find that to be creepy Americanised stuff).

£71 seems like a really high premium considering I'm

• non-smoker
• healthy gym-goer etc
• no family health issues
• they bumped the price up because I have a 'low BMI' (but didn't explain why that's a risk)

I thought I would be low risk of illness/injury. My mortgage is £1100 and the quote was to cover £2400 (80% of income), 3 month deferral.

I'm not ruling it out yet, but I'm a bit hesitant to spend that much to insure a risk I think is unlikely. Does anyone have any kind of benchmark of how much the premiums on this type of insurance should cost?

Many thanks.

Woodstok2000

80% of income is at the high end - is it a short term or long term plan (i.e. how long would it pay out for)?

Premiums do seem high based on the below link, but there are a lot of variables. You may be best getting a few more quotes to see if this one is an outlier:

https://iaminsured.co.uk/income-protection-insurance/guides/average-cost-of-income-protection-insurance-uk/

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6689171/income-protection-how-much-is-reasonable-for-premiums

How long does it pay out for? Until your retirement age?

Is it a proper protection insurance which is a single policy until retirement age or is it ASU/ PPI so just a 12 month policy?

Is protection for being fit to do your specific job or any job?

There are a wide range of policies out there, from rubbish one year policies where the premiums will go up every year and in the event of a claim you only get paid out for 12 months to the other extreme of all bells and whisltes that will payout potentially for 30 years or more and the premium never changes . Your premiums are cheaper than mine but you dont mention how much the payouts would be.

If you map morbidity to BMI you will find its a U shaped curve so people at both extremes have a higher claim rate than those in the normal weight range.

dunstonh

I'm not ruling it out yet, but I'm a bit hesitant to spend that much to insure a risk I think is unlikely. Does anyone have any kind of benchmark of how much the premiums on this type of insurance should cost?

Are you referring to budget plans or comprehensive plans or the many in between?

You cannot compare Income protection on price alone. £71 could be cheap. It could be expensive (although going too cheap into the budget plans could end up being very expensive).

kingstreet

When checking costs, ensure you choose guaranteed rates and not the reviewable/renewable kind as the latter will increase in future.

Always choose the "own occupation" definition for claims. Work Tasks, or Activities Of Daily Living are cheaper but make claiming more difficult as the ability requirements are more easily reachable.