A guide to Cheap Income Protection Insurance from British Insurance
Income protection insurance can provide you with a replacement income for up to 12 months if you are unable to work due to ill health or involuntary unemployment and has traditionally been criticised by protection experts as offering poor value to many people. But all this should now change as a result of a cheap income protection insurance product launched by British Insurance that uses a highly innovative age-related approach.
In many cases the old-style income protection insurance premiums were often significantly undercut by another product called income protection insurance, which does not cover involuntary unemployment but which is typically able to pay out claims benefit for illness or injury right up until the policyholder’s intended retirement date – if they fail to recover.
But the new cheap income protection insurance from British Insurance offers premiums which can be so inexpensive for younger people that the comparisons with income protection insurance are much more finely balanced.
Cheap Income Protection Insurance From British Insurance Versus Standard Income Protection Insurance
The cheap income protection insurance from British Insurance product continues to share most of the same characteristics of standard income protection insurance. Premiums are not influenced by the policyholder’s occupation, gender or smoking habits and the cover can be arranged instantly without the need for complex initial underwriting. But a major difference is that premiums are influenced by the policyholder’s age at outset.
Applicants are subdivided into a number of different age bands and the younger they are the less the cover costs them. Furthermore, premiums do not increase once cover has started just because policyholders grow older.
For those aged between 18 and 25 cover costs only £1.85 a month per £100 of monthly income replacement, and even for someone aged between 41 and 45 the cost of £100 of monthly income replacement is only £3.85 a month.
This pricing structure reflects the fact that British Insurance is highly aware that younger people are likely to make fewer claims. They tend to find alternative employment more quickly if they lose their jobs and to be less prone to health problems. Surely it is therefore only fair that they should be charged less?
How Does The Cheap Income Protection Insurance From British Insurance Cover Work?
You are eligible to apply for cheap income protection insurance from British Insurance if you are aged between 18 and 65, are permanently
resident and working in the UK, Channel Islands or Isle of Man, and have been actively in work for at least six months – without being off sick – at the time you apply.
You choose at outset the amount of monthly income replacement you require in the event of a claim, subject to the permitted maximum of £1,000 a month or 50% of your gross monthly income – whichever is lesser. This amount and your age at the time of making the application are then used to calculate your premium, which is collected monthly in advance by direct debit.
Cheap income protection insurance from British Insurance can continue until you are 65, but you can cancel without penalty by writing to British Insurance at any time. You will even receive a premium refund if you cancel within 30 days of the policy start date.
Monthly claims benefit will start being paid immediately you are unable to work for 30 consecutive days as a result of either involuntary unemployment or illness or injury, and payment will backdate to day one – this is an extremely important point to bear in mind when making comparisons with income protection insurance, the more affordable versions of which typically only start paying out six months after you have made a claim.
Claims benefit from cheap income protection insurance from British Insurance continues being paid either until you are able to return to work or, if you are unable to do so, until the maximum 12 monthly benefit payments per claim have been made. Further claims can be made in the future once you have returned to work for an appropriate period of time – one month for unrelated health conditions but six months for related health conditions and involuntary unemployment.
Cheap Income Protection Insurance From British Insurance Versus Income Protection Insurance
Whether income protection insurance proves better value than cheap income protection insurance from British Insurance will depend primarily on the particular circumstances of each case, because income protection insurers vary the premiums they charge according to a range of different criteria. They don’t just increase premiums for age, but also for other factors such as occupation, smoking habits, gender and medical history. So one policyholder could be asked to pay three or four times as much in premium as another policyholder of exactly the same age and who is taking out identical cover.
There is also far more than just the price to consider. For example, different individuals will attach different levels of importance to the fact that income protection insurance doesn’t cover involuntary unemployment, doesn’t typically pay out claims benefit for the first six months in its more affordable formats and is far more complex to understand and time consuming to arrange at outset.
In many cases an income protection insurer will require you to wait several weeks whilst it conducts its initial medical underwriting process, which could involve writing to your GP or even requiring you to attend a physical examination with an independent doctor in your area.
Many income protection insurers offer you the opportunity to take out cover which guarantees that premium rates will remain fixed throughout the term. This can provide a valuable element of security that cannot be obtained from cheap income protection insurance from British Insurance, the providers of which reserve he right to increase or decrease their premium rates in the future if their claims experience turns out to be significantly different from that originally anticipated.
Cheap Income Protection Insurance From British Insurance The Exclusions
Income protection insurance is far more complex to understand and has more small print restrictions to be wary of. But cheap income protection insurance from British Insurance still has some significant exclusions. It will not, for example pay claims benefit as a result of:
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Medical conditions that have already existed at the outset of cover – although this exclusion is removed if there is a continuous two year window between when the condition last occurred and when you make your claim.
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Any claims you knew you were going to make at the time you took out the policy.
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Involuntary unemployment claims if you had not been in continuous work for the previous six months.
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Cessation of trading that isn’t actually permanent if you are self-employed.
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Voluntary redundancy or resignation.
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Dismissal contributed to by your own misconduct.
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Any health claims for which your condition is not confirmed by a doctor.
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Self-inflicted injuries, including those resulting from alcohol or drug abuse.
The Need For Cheap Income Protection Insurance From British Insurance Cover
Whether you opt for cheap income protection insurance from British Insurance or income protection insurance, or indeed a half-way-house between the two offered by British Insurance called “long-term income protection insurance,” some of the motivating factors will be the same.
No-one can claim to be immune to the problems of ill health, and some people are far more vulnerable to its financial consequences than others, especially those who have been forced to use up any savings they once had simply to keep a roof over their heads in the current era of seemingly crazy house prices.
Much also depends on the level of sickness cover that someone has in the workplace, so the first step is to make enquiries about this via your HR department. Those with the most generous employment packages could find that they are members of a group income protection scheme which will pay them somewhere between a half and two thirds of their salary until they recover or, if they fail to do so, up until their intended retirement date.
Unfortunately, however, many people will find that they will be primarily dependant on State benefits in their hour of need. Exactly what you receive from the State will depend on factors such as your age and savings levels, whether you own or rent your property and the number of dependants you have.
Even the best sick-pay scheme will not protect against unemployment, although the fact that many people may feel confident of receiving a sizeable redundancy payment could make them value the involuntary unemployment component of cover less than the illness and injury component. With cheap income protection insurance from British Insurance exclusion of voluntary redundancy is another major consideration to take on board.
Some individuals may feel that they need both age-related income protection insurance to provide short-term cover for up to a year for involuntary unemployment and illness and injury, and income protection insurance to provide longer-term cover purely against illness and injury. If so, it can be possible to dovetail the two income protection insurance products by selecting income protection insurance that only starts paying out at the claims stage after a year – and this will cost significantly less than income protection insurance that starts paying out after only six months.
Cheap Income Protection Insurance From British Insurance Complaints And Compensation
Anyone who has reason to be dissatisfied with their cheap income protection insurance from British Insurance or the service standards that accompany it should not hesitate to complain to British Insurance and, if they are not happy with the steps it takes to rectify the situation, they may then be able to take the matter for a free external hearing with the Financial Ombudsman Service, which makes impartial judgements on disputes between consumers and financial companies.
It is also important to realise that, in the unlikely event that the insurers of cheap income protection insurance are unable to meet theri liabilities, you may be entitled to compensation from the Financial Services Compensation Scheme. get a quote for payment protection insurance
