Income Protection Insurance: The Costs

Comparable to other types of insurance, the necessary insurance premium that must be paid is actually dependent on several important factors, for it to provide the proper protection needed for your income. In this article, we will delve deeper and have a more comprehensive look on these factors.

Job and Income

All companies offering income protection insurance will first look at your job and income, since this is the most important factor that will determine your premium. Semi-skilled workers, when compared to those with administrative jobs, will have a substantially lower income protection insurance premium. This is to cater to the risk involved in these types of jobs. Also, self-employed individuals are charged with higher premiums in comparison to white-collared workers employed in companies. Individuals who are often changing jobs are also charged higher than those who worked in the same company for 5 years or more.

Age and Gender

The computation of the insurance premium is also affected by the age and gender of the person, since they both play a role in determining the risk involved. For example, a person who is well past his 40’s are more liable to pay a larger premium than those who are still in their mid-30’s because they are more susceptible to sickness and other debilitating conditions. When it comes to gender, male insurance buyers are usually more subject to higher premium rates than females, since they are considered to belong to the higher risk group.


This factor is quite easy to understand, since those with a history of pre-existing medical conditions will have a higher income protection insurance premiums, since they are more susceptible in health deterioration and therefore have a higher risk.


Insurance companies who offer Income Protection Insurance will give lower premiums for those who have a longer deferred period.

Contract Type

Indemnity contracts are cheaper than agreed value contracts, since the latter has more benefits than the former. Companies who offer cheaper policies are more likely to offer indemnity contracts because it only covers basic benefits as opposed to the more flexible policies that could offer a wide range of benefits, which can only be obtained by getting an agreed value contract.


The insured amount of income will affect the charged premiums for the income protection insurance policy. Naturally, the rate is higher for those who wish to have 60% of their incomes protected. It’s also natural to have a cheaper premium if you’re a buyer who opt for only the barest benefits, as compared to those who go for a maximum compensation with the addition of other benefits such as transplant surgery benefits, rehabilitation benefits and even a death benefit.

The premium cost will even be higher for those who add covers for like total disability covers or critical illness covers.


The main factor that will ultimately affect the premiums cost for income protection insurance is your job, since it determines your income, which the insurance protects, albeit only a portion of it.

Now that the factors had been discussed, determining the most affordable yet the most efficient protection insurance will be much easier.

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