If you are looking to save money on those costs that are necessary, then buy an income protection insurance policy now – and you could potentially save thousands of pounds over the life of the policy.
Not only that, but you will benefit from having a financial safety net of a monthly tax-free income in the event that you become unable to work due to illness or injury for a period of time (which could be anything from weeks to months to years, depending on the extent of your illness / injury).
While this may sound too good to be true, the figures speak for themselves. Protection insurance brokers Drewberry have published a report that highlights why buying income cover at a young age and “locking in” the premiums can save you money.
You can see the research here which shows how the older you are when you buy the cover, the more the premiums will typically cost you.
The graph displays the total cost someone would pay for income protection over the life of the policy, based on ages from 25 to 50 years old. So a 25 year old non-smoking office worker requiring a £2,000 income in the event of being unable to work, and who fixed the cost of their premiums, would pay just over £12,000 over the lifetime of the policy.
Compare this to if they take the same cover when they are aged 40 – this would cost just under £16,000. So, they would be paying around £4,000 more for a shorter period of cover.
Why are the premiums less for a younger person?
If you take out income cover and fix the rates so they don’t increase over the life of the policy, these premiums will be calculated on a number of factors. These will include your age and current state of health. In most cases, the 25 year old you will be fitter than the 40 year old you and will be less likely to have any pre-existing medical conditions that could be excluded from the cover.
So, the younger you are:
- The more attractively-priced insurance you will get.
- The more likely you will get cover that has less exclusions.
Plus you will be getting the peace of mind of knowing that you will still receive an income in the event you become unable to work.
Do young people need income protection?
The need for income cover isn’t just the domain of older people, as the research highlights:
In just 3 months up to February 2013 the numbers of younger people claiming Employment & Support Allowance (ESA) due to incapacity were …
- Over 30,000 people under the age of 25.
- Nearly 80,000 workers under the age of 35.
In fact income insurer Liverpool Victoria shows that in 2012, their youngest income protection claimant was just 21 years old.
And with ESA starting at around £71.00 a week for the first 13 weeks of incapacity (rising to £106.50 thereafter), most people would not be able to survive financially should they become unable to work.
The message is clear – you are never too young to think about income protection insurance.