If you are self-employed, income protection insurance is a way to provide some monthly income if you are unable to work due to sickness or injury. The benefits are designed to help pay for your financial commitments such as mortgage, rent, utilities, food, and even business-related expenses.
If your income stopped today, how long would you be able to buy groceries, pay your mortgage, pay school fees: not to mention utilities? Income protection insurance covers sickness and accident-related injuries that cause the temporary inability to work. This can include things like stress, RSI and back injuries. A regular amount is usually paid each month instead of a one-off lump sum.
Below are some key elements that affect the cost of premiums you pay.
#1. Age
As with most insurance policies, your age will significantly impact the premiums you pay. As you get older, the probability of illness increases, and as a result, the older you are, the more you are likely to pay for income protection insurance.
#2. Lifestyle Factors
If you are generally healthy and avoid smoking or vaping, the cost of your policy will be lower as the insurance companies know that those that live healthy lifestyles are less likely to get sick than those who don’t. As a result, those that are healthy may pay lower rates than those who are not.
#3. Pre-existing Health Conditions
If you have had any serious medical issues in the last five years, they will likely be considered pre-existing conditions by insurance companies. These pre-existing conditions could prevent you from getting coverage, increase your rates, or be excluded from coverage. The insurance company will review these conditions when you apply, decide whether to cover those or not and if they do, whether they may increase your premiums because of them.
#4. Amount of Coverage
The amount of coverage you choose plays a significant role in the cost of your premiums. However, most policies are very flexible, allowing you to select a level of coverage that works for your budget but still provides the income replacement you need. The higher the payout you choose, the more expensive the policy will be.
#5. Profession
There are certain types of “risky” jobs, and anyone with a relatively more dangerous job will typically pay higher premiums. For example, office workers will usually have lower premiums than road construction workers because they have a much higher risk of injury.
#6. The Deferral Period
This is the amount of time you will have to wait before your payments begin. This is an important part of your policy to consider, as you will have to decide how long you can go without income before your income protection policy starts to pay.
TBM Insurance is a family-owned business and offers a comprehensive range of life insurance solutions for businesses, families, and individuals. If you’d like to have a coffee and an informal chat to review your existing cover or would like to talk more about your insurance needs, give Darren a call at 0800 826 467.