Why Income Protection:
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Reducing the cost of Income Protection
Your client may think income protection is too expensive. But by adjusting a handful of factors, it could be more affordable than your client expected. Here’s how you can bring the cost of protection down:
Ways to bring the cost down
Budget income protection option
Short-term income protection can be much cheaper than full cover. It has a fixed maximum claim period – 12 months (with guaranteed premiums only) or 24 months (with guaranteed or reviewable premiums).
Length of cover
You’d normally look to protect your client’s income until they retire. Or you may look at the policy ending when their mortgage does – as long as they can cover their monthly outgoings. Reducing the term gives a cheaper monthly premium.Budget income protection option
Short-term income protection can be much cheaper than full cover. It has a fixed maximum claim period – 12 months (with guaranteed premiums only) or 24 months (with guaranteed or reviewable premiums).
Waiting period
A longer waiting period makes the monthly premium cheaper. This means your client could wait longer before their policy pays out. You can base the waiting period on their level of savings compared to their monthly outgoings, or how much employer sick pay they’re entitled to. Our Income Shortfall Calculator can show you how much your client could lose if they couldn't work and how much of their income they could protect with LV=.
Amount of cover
The more cover your client has, the higher the premiums. Looking at your client’s monthly outgoings will help you recommend the right amount of cover.If some of their outgoings aren’t essential (like holidays or day trips) - recommend a lower level of cover. It just means if they’re not working, they’d need to cut these luxuries out.
Or, if your client’s partner works and contributes to the household income, you could recommend enough cover for a regular outgoing or debt – like the mortgage or rent.
Waiting period
A longer waiting period makes the monthly premium cheaper. This means your client could wait longer before their policy pays out. You can base the waiting period on their level of savings compared to their monthly outgoings, or how much employer sick pay they’re entitled to. Our Income Shortfall Calculator can show you how much your client could lose if they couldn't work and how much of their income they could protect with LV=.Income Protection for less than £10 a month
Does your client think Income Protection is too expensive? Maybe they’d rather spend their hard-earned money on something else – like TV packages or phone insurance. But what if you could offer comprehensive protection for less than £10 a month? Here’s how.
Sam is 30 – he doesn’t smoke and works as an account manager. He earns £27,000 a year and plans to retire at 68 (state pension age). His £44.34 starting quote is based on:
- £1,350 a month inflation-linked cover (the maximum available based on 60% of Sam’s earnings).
- A one month waiting period.
- Includes waiver of premium.
- Paying out until retirement.
As with many clients, £44.34 is too expensive for Sam – his budget is £10 a month.
Here’s how you can tailor cover to meet Sam’s needs and budget.
Here are our top tips to help you understand some different client scenarios. This includes questions you could ask your clients, handy tools to demonstrate the importance of income protection, and tips to check the finer policy detail, which can vary by provider.
Does your client have a specific health condition?
How sick will your client have to be in order to claim?
Will your client be entitled to employer sick pay?
Will your client still be entitled to state benefit?
Are you recommending life and critical illness cover?
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