Protection insurance can provide an income should you become unable to work through accident or illness. Insuring your ability to earn is clearly a good idea, but how much will it cost?
The fact is, how much you need to pay for the right type of cover will depend on many factors. In this article, we will look at the factors what can affect the costs of cover and will look at some examples with different age ranges so you can see how age impacts the cost.
What impacts the costs?
Your lifestyle, income, and whether you have a family or are single with no dependants will impact what cover is best suited to you, and therefore how much you need to pay.
For example, someone in their twenties with no mortgage or children won’t have the same needs as someone in their thirties who has a home and a family.
There is no ‘one-size-fits-all’, so the monthly premiums you will need to pay can depend on a number of factors. This makes it hard to generalise the cost without knowing the details of the specific individual’s needs.
However, factors that can impact the cost include:
- Your age when you start the policy
- Your smoker status
- Lifestyle factors, such as hazardous sports or motorbike riding, can deem you higher risk
- Your health – this includes your health as well as family history
- Your occupation – naturally, some job roles can be deemed higher risk that others
- Your existing cover – you may already get some protection from your employer that you can use towards covering yourself for your shortfalls
Other influences on the cost of cover
There are many other ways to influence the cost of the cover, including budget cover options and different premium types giving upfront discounts. If you are worried about the cost of cover then you should speak to an adviser.
We can work out the best option for you based on your budget, making sure that the cover is suitable for you and also affordable.
We will help you to consider the types of cover you need that are within your budget, the term of the cover – which means how long you want the cover – and the amount of cover.
These factors all have an impact on the cost of the cover, but some protection is always better than none.
How much will it cost?
To give you an approximate cost for the different types of cover, we will need to make a number of assumptions.
However, the figures below should give you some idea as to the kind of figure you could expect to pay for your income protection or life insurance.
Income protection
An income benefit of £1,500 per month could pay the majority of your fixed outgoings if you were unable to return to work and were signed off work due to illness or an accident.
These estimates assume you need this benefit to start to pay from three months after your employee sickness benefit ends and covering to age 65.
These costs are based on a non-smoker, in good health and occupation class 1 (office-based job role). Below are the costs of cover based on the age of the applicant.
| Age at application | Age 25 | Age 35 | Age 45 |
| Cost of premiums per month | £22 | £30 | £47 |
Life insurance
For a person with a mortgage of £350,000 on a repayment basis with a term that ends before age 65, a decreasing term life assurance policy with £350,000 over the same term would cost the following. (These costs are based on a non-smoker with no major medical issues.)
| Age at Application | Age 25 | Age 35 | Age 45 |
| Cost of Premiums per month | £10 | £15 | £22 |
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How to get the advice you need
When considering income protection, there are many factors to consider to help get you the right level of cover at the right cost.
My team and I are on hand to answer your questions and queries. Feel free to contact me on: Hatice.Karadal@alexanderhall.co.uk to discuss any of the points raised, or visit our website.
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Hatice Karadal is manager of the protection team at mortgage intermediary Alexander Hall
