The factors that are affecting the cost of income protection insurance.

The price of IPI widely varies based on a range of different factors in a person’s life such as your occupation, your annual income, the waiting period and your age and gender.

Different insurers have different opinions on which occupations have more risks than others, so any potential customers are ranked on the basis of how likely they are to claim in the future. Low risk occupations, which usually involve little manual work such as administrative staff and managers, are more than likely to have lower premiums. Conversely, high risk occupations such as manual workers, whether skilled or unskilled, are very likely to be subject to higher premiums. The logic behind this is due to the fact that many manual workers use heavy or dangerous equipment that naturally puts them at a higher risk of injury.

The buyer must declare all components of their annual income in order to get the right estimate, since income protection covers are tax deductible. Also the buyer will most probably have to pay 1%-3% of their annual income, depending on what policy they have chosen.
If the IPI claimer is financially able to survive for a longer period of time while out of work, the lower the premiums will be. So the longer the deferred period the better it is for you, but obviously this depends on factors such as: whether or not you are eligible for a generous sick pay from your place of employment. The deferred period can be as long as a year, however if you feel you cannot manage without your payments, a shorter deferred period can be put in place for as short as four weeks.

And the final aspect that could have an affect on the price of your IPI is a persons age and gender. Naturally a persons body deteriorates as they mature so it is very likely that the older the person is the more they will pay. Likewise a persons gender can also affect the amount of premiums and women are likely to be subject to higher premiums than men; due to the fact that women are said to claim on income protection insurance more than men, and are supposedly more likely to retire early.

So for the most cost efficient income protection insurance on the market, get authorised professional advice and full market research from any income protection provider.

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