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Published on October 26th, 2013 | by Pete


Taking out income protection when young saves money, finds Drewberry Insurance

Some interesting new research from a leading protection insurance broker has shown that the younger you are when you take out income protection insurance, the more money you may be able to save on the overall cost during the lifetime of the policy.

Income protection insurance provides you with a tax free monthly income in the event that illness or injury prevents you from working. This means that you can still maintain your essential outgoings at an otherwise difficult time. The cover runs for as long as you are unable to work – even up to age 65 if you never return to work.

With State Assistance paying a little over £71 a week (rising to £106.50 per week after 13 weeks), most people would struggle to survive on such limited benefits. That is why income protection insurance exists.

Many people only decide to buy income protection insurance when they have a life changing event, such as the birth of a baby, or getting a mortgage etc. Research by Drewberry Insurance , however, has shown that it is typically more beneficial to buy the cover at an early age by “locking in” the premiums. Not only will it provide you with valuable income protection, but, you will save on the cost of the cover over time.

Other benefits of taking out a policy when you are younger include:

• less exclusions (because you are younger and fitter, it is unlikely you’ll have any pre-existing health conditions that would be excluded from the cover);
• the ability to increase the sum insured in the future (with most insurers) if required, with no need to provide additional health information.

The study charts how buying income cover when you are younger means you get protection over a longer period of time for less cost than if you had taken it when you were ten or twenty years older.

For example:

• a 30 year old office based worker looking to cover £2,000 per month, who is a non-smoker, would pay £13,608 over the lifetime of the policy (i.e. up to retirement age);
• if the same person waited until they were 40 before investing in a policy, the total premiums payable would amount to £15,954;
• so, by taking the cover at an earlier age, the worker would get an extra ten years’ protection as well as save over £2,300 on the cost of the insurance;
• they could make even more savings (over £4,300) if they had taken out cover at age 25 rather than age 40.

Of course, as with all insurance, there are terms and conditions that may need to be met, and manual workers and people in trades deemed “risky” may not be able to take advantage of certain aspects of the cover. That said, any worker concerned about how they’d meet their bills in the event of accident or injury that prevented them from working may wish to find out more about income protection insurance as soon as possible.

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