The main levers for reducing income protection cost
1. Extend the deferred period
This is the single most effective way to reduce IP cost. A 26-week deferred period costs around 30–40% less than a 4-week deferred period for the same monthly benefit. If you have employer sick pay or savings, choose a longer deferred period.
2. Choose short-term cover
A short-term policy (paying for 1 or 2 years maximum) costs significantly less than a long-term policy. It's not ideal, but it's far better than no cover at all. Short-term IP is particularly popular with younger buyers on tight budgets.
3. Insure less of your income
You can choose to insure 50% of income rather than 70%. Reducing the benefit amount reduces the premium. Work out the minimum monthly income you'd need to cover essential outgoings and insure for that.
4. Choose a lower occupation class definition
Some insurers offer "suited occupation" or "any occupation" definitions at lower premiums. These are harder to claim on, but they do provide some protection for a lower cost.
5. Compare the whole market
Premium variation between insurers for identical IP cover can exceed 50%. Legal & General is frequently one of the cheapest for office workers. The Exeter, British Friendly, and Cirencester Friendly may be cheaper for certain occupations or medical histories.
Frequently Asked Questions
The cheapest option varies by age, occupation, and health. Legal & General is often among the cheapest for office workers with standard health. Use a whole-of-market comparison to find the best rate for your specific profile.