Income Protection Review – Always a Good Idea

Reviewing your income protection is sensible throughout the life of your policy because as your life changes so will your income protection needs.

A few of the main reasons an income protection review should be carried out include:

  • An increase or reduction of income

If your income goes up, you will be able to increase the amount of cover you have. If your income goes down and is likely to remain lower it is sensible to review your income protection because you may be paying for more cover than you are able to claim. Income protection will only protect up to about 60% of your gross annual income.

  • An increase or reduction of monthly expenditure

If you suddenly pay off a big loan or your mortgage you may not need as much income protection but equally if you start a family it is sensible to review your potential outgoings to make sure you will have enough cover.

  • A change in your expected retirement age

You may find you are due a windfall or business may have proven more fruitful than anticipated and as such you could take early retirement. Having income protection for a shorter term can bring down the cost.

Generally, if you need to reduce your cover or shorten the term you will be reducing the ‘risk’ the insurance company is exposed to which may result in a reduction in your monthly premium and insurers are unlikely to ask you any medical questions.

If you review your income protection and find you need to increase the amount of cover or extend the term the insurance company is likely to ask you more medical questions to make sure your health has not deteriorated since taking out the policy. As you would expect, increasing the term or cover will result in the price going up because you are increasing the risk to the insurance company.

There may be many reasons why an income protection review can come about and there is no point putting it off but it also a very good idea to make sure you are still eligible and you can get the cover you need before cancelling or replacing an existing policy.

Price comparison sites do not usually provide enough options or information to really research the market so it is always worth speaking to an adviser who will be happy to sit down and review your income protection with you.

You may find that by reviewing your income protection and other insurance needs at the same time that you can combine other insurance such as life or critical illness cover with your income protection and bring the overall price down.