Income Protection Insurance Rates: Is Income Protection Cover Worth The Cost?

Income Protection Insurance Rates: Have you ever wondered what would happen to your finances if you could not work due to illness or injury? Could you continue covering your bills, mortgage payments and living costs without your regular income?

Income Protection Insurance Rates: Is Income Protection Cover Worth The Cost?

This is a scary thought for many people. Luckily, income protection insurance provides a solution. Income protection gives you a regular payout if sickness or injury stops you from working, helping maintain your standard of living.

But how much does income protection cost? What affects the premium rates? And how do you get the most suitable cover at the lowest price?

In this blog post, we will explain everything you need to know about income protection insurance rates.

About Income Protection Insurance

Income protection insurance provides a regular income if you can’t work due to illness or injury. With income protection cover, you’ll receive a portion of your salary – usually around 75% – until you’re able to return to work or retire. This can help cover costs like mortgage payments, bills, and everyday expenses.

Choosing the right income protection policy with the optimal premium rate is crucial to securing your financial future.

How Income Protection Insurance Works

With income protection insurance, you’ll receive a regular tax-free income if you’re unable to work due to sickness or injury. The payouts continue until you return to work, reach retirement or death – whichever happens first.

Income protection insurance provides security if you’re unable to work due to:

  • Long-term illness such as cancer, stroke or heart disease
  • Injuries from accidents that prevent you working
  • Mental health conditions like anxiety, depression or stress

Your income protection policy will have a deferred period before payouts begin. This is also known as a waiting period. Common deferred periods are 1, 3, 6, 12 or 24 months.

The longer your deferred period, the lower your monthly premiums. However, you’ll need savings to cover costs until the payouts start.

Once the deferred period ends, you’ll receive monthly payments. The amount depends on the benefit level you choose. This is usually a percentage of your income – typically between 50% and 75%.

Key Factors Determining Income Protection Rates

Income protection premiums vary considerably based on your personal situation and policy choices. Key factors determining your income protection insurance rates include:

Your age

Younger people normally pay lower income protection rates, as the risk of illness or injury is lower. Premiums increase as you get older.

Your health and lifestyle

Your current health and medical history impact your risk profile. Income protection rates will be lower if you’re in good health with no pre-existing conditions. High-risk occupations and hazardous hobbies also increase premiums.

Deferred period length

Choosing a longer deferred period before payouts begin substantially reduces monthly costs. However, you’ll need to cover costs yourself initially if unable to work.

Benefit period duration

You can choose benefit periods of 1, 2, 5 years or until retirement. Longer benefit periods mean higher premiums but greater long-term protection.

Monthly payout amount

If you want 75% of your income covered, your premiums will be higher than a 50% benefit level. The higher percentage you insure, the more you’ll receive each month if unable to work.

Optional policy extras

Additional options like inflation linking or covering work retraining costs add to your overall premiums. However, they provide greater insurance coverage.

Your occupation

If you have a high-risk job like construction, manufacturing or agriculture, you’ll pay higher premiums due to the increased chance of injury.

Your gender

Due to varying risks for serious illnesses, income protection rates are often lower for women than men. However, premium differences by gender are reducing.

Whether you smoke

If you’re a smoker, expect to pay higher premiums – sometimes up to 50% more. This reflects the increased health risks.

How to get the best income protection rates

Follow these tips to secure the most competitive income protection insurance rates for your needs:

Shop around

Get quotes from multiple providers. Online comparison sites can help you quickly compare premiums from top insurers.

Consider your deferred period

Choose the longest deferred period you could manage financially without the payouts. 6 or 12 months deferred periods offer the cheapest rates.

Pick an appropriate benefit period

Opt for the shortest benefit period you need rather than the longest available. Annual or 2-year benefit periods have lower premiums.

Adjust your cover level

Think about an adequate but affordable monthly payout. You may not need 75% of your income covered.

Improve your health

Lose weight, quit smoking, cut back on alcohol and keep any medical conditions under control to get lower premiums.

Look for special offers

Some insurers offer discounts for buying online or taking out cover with your partner. Public sector workers also get preferential rates.

Use a broker

An insurance broker can search the whole market for you and help you find competitive income protection rates.

Income protection for self-employed professionals

If you’re self-employed, income protection is especially important as you won’t get sick pay. However, premiums are higher than for employees.

You need to personally cover business costs like equipment, premises and staff during periods of absence. Opt for a 12-month deferred period before payouts to get lower premiums.

Make sure your monthly payouts can cover all essential business and living costs. You may also need a longer benefit payment period.

Consider critical illness cover too. This pays a tax-free lump sum if you’re diagnosed with a specified serious illness – providing funds to keep your business going.

Is Income Protection Cover Worth the Cost?

Income protection insurance is a valuable but often overlooked form of cover. While premiums may seem high, costs are small compared to the severe financial hardship you could face if unable to work long-term.

Income protection provides a safety net until you can return to work. It ensures you can pay the bills and mortgage without raiding savings or falling into debt.

Getting a quote is quick and easy. You can then decide if the peace of mind justifies the monthly premium based on your personal situation.


Income protection rates vary according to your age, health, job and lifestyle. While premiums are higher than some other insurance types, income protection is invaluable if you’re unable to work due to illness or injury.

Comparing quotes from leading insurers helps ensure you get an optimal policy at the best available price.

Securing your finances with income protection means you can recover from illness or accidents without money worries.

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