Disability Insurance

What Does Disability Insurance Cover?

Disability Insurance protects against all kinds of short term conditions and long term disabilities, regardless of whether they result from illness or bodily injury.

Providing you didn’t have the condition before taking out the insurance policy, you can make a claim if the condition stops you working. It also:

• Covers you if you can’t do your specific job when you opt for own occupation protection
• Pays out from as little as one week off work with an illness or injury
• Pays out until retirement when you choose long term cover if your illness or injury prevents you working ever again.

Does It Cover Pre-Existing Conditions?

When you apply for Disability Insurance, the insurer will ask you a series of medical questions. These will relate particularly to your health over the last five years. If you declare any medical conditions, the insurer may:

• Cover the condition on standard terms (so you won’t face any increased premiums or terms different from those of a healthy individual)
• Cover the condition for an additional premium
• Exclude the condition but offer a date at which it will consider reviewing the exclusion
• Exclude that condition entirely (perhaps with a premium discount to compensate).

Do you have pre-existing medical conditions? We have direct access to the underwriters at all the major UK insurers and can negotiate the best terms given your circumstances.

Please feel free to call us on 02084327333 or email help@drewberry.co.uk to discuss your options.

Alex Weir
Independent Protection Expert

Disability Insurance Exclusions

Most insurers have a few blanket exclusions that apply to everyone. Exclusions often include disabilities sustained via:

• Criminal activity
• Illegal / illicit drug use, substance abuse or alcohol misuse
• Foreign travel to areas of active internal conflict, high terrorism risk, political instability or countries the Foreign and Commonwealth Office (FCO) has advised against visiting.

Other than the above, Disability Cover has few standard exclusions. Instead, your insurer decides what your policy will and won’t cover you for based on your medical history.

Do You Need Disability Insurance?

Whether or not you need Disability Insurance will depend on your own personal circumstances. But it’s important to consider this: How would you cope if you developed an illness or injury that meant you couldn’t work? Especially if that condition was long-term, preventing you from working ever again?

Sadly, the chances of this are higher than many people assume, as 4.35 million people are currently “economically inactive” in the UK (i.e. not in work) due to long term illness or disability. Disability Insurance helps ensure that if the unexpected happens, you have the financial support you need to keep your life on track.

Alternatives To Disability Insurance

Some people assume they’d be able to rely on other means — such as savings, company sick pay or state benefits — to support themselves if they fell ill. However, consider whether:

• You could survive on your savings for more than a few weeks if you couldn’t work
• Your employer offers full sick pay for a lengthy period or simply provides the bare legal minimum — Statutory Sick Pay (SSP) at £116.75 per week for 28 weeks?
• You could survive on Employment and Support Allowance (ESA), one of the main state benefits for disabled adults, which starts at £90.50 per week for over-25s depending on the nature of your disability.

Relying on savings

Many people would struggle if they had to rely on savings. Shockingly, nearly 1 in 5 working professionals said their savings wouldn’t even last them a week. That’s a huge risk to take if the breadwinner suddenly couldn’t work.

Relying on state benefits

Given average household outgoings are nearly £2,500 a month, and the average Universal Credit payment falling between £650 and £1,140 a month, most of us would be in trouble if our income was to suddenly stop.

While you may get more money depending on how serious your disability is, and you may also be entitled to other state benefits, these rarely make up for lost earnings in full.

Why Award Winning Blogger Mrs Mummypenny Chose Disability Insurance

Award-winning blogger Mrs Mummypenny understands the importance of financial security. As a self-employed mother, she turned to Drewberry for help in protecting her income and ensuring her family’s financial stability in case of illness or injury.

With Drewberry’s guidance, she took out Disability Insurance to make sure her family wouldn’t face hardship if she couldn’t work.

How Much Does Disability Insurance Cost?

So, how much does peace of mind cost? It all depends on your unique situation. Insurers look at both your personal circumstances and the level of cover you require to calculate the cost of your plan. To calculate your premiums, they’ll look at your:

• Age
  The older we get, the higher the risk of developing a disability, illness or injury. As a result, the older you are the more cover costs.
• Health / Medical History
  Insurers may increase your premiums if you have a pre-existing condition or simply exclude that condition outright.
• Smoker Status
  Smokers are more likely to become ill than non-smokers. Most insurers therefore charge smokers more for protection.
• Occupation
  Some jobs are riskier than others and insurers charge more in premiums as a result. For example, manual workers have a higher risk of workplace injuries than office workers. Plus, manual workers’ livelihoods are at greater risk from illness and injury – which is why premiums tend to be more expensive.

Example Quotes

In the table below, we’ve put together example quotes to show you the average monthly cost of cover. These quotes are based on the following assumptions for the individual:

• A 35 year old, in good health
• Employed as an office worker
• Seeking a benefit of £1,500 a month
• Looking for an 8 week deferral period
• Going to retire at age 65
• Looking for long term cover that will pay out until retirement if they can never work again.

To compare premiums, we used our online cost calculator to compare the leading UK insurers. The below premiums represent the cheapest policy that matches the above criteria from the entire UK market.

What Affects The Cost Of Disability Insurance?

You’ll have to make some choices about your policy when you take out insurance. These impact the cost of your monthly premiums, and can be adjusted to a certain extent. We’ve used the same details as above to provide some more monthly premium examples.

Monthly Payout / Sum Assured

The sum assured is a technical term for how much money you’ll get each month if you make a claim. You can protect between 50% and 70% of your gross (pre-tax) earnings, depending on the provider you choose.

The higher the benefit, the more expensive your monthly premiums.

Payout Period

You have two options when you buy Disability Insurance:

• Long term cover
  Long term cover pays out each month until retirement if you develop a disability so severe you can never work again
• Short term cover
  Short term cover pays out for up to 1, 2 or 5 years per claim depending on your policy. While short term protection lasts until you retire, so you can claim for different conditions over the policy’s life, the insurer stops paying out for any one claim after a set period, even if you’re still too ill to work.

Long term cover is the more comprehensive option. It could potentially pay out for years or even decades depending on your disability. For this reason, we tend to recommend it over short term policies. However, if your budget won’t stretch to long term protection, short term cover is better than no policy at all.

Your Deferral Period

You choose the policy’s waiting period (known as the deferral period) when you take out cover.

This is the length of time between you being signed off sick and the insurer paying out. For example, an eight week deferral period means the insurer starts paying out after you’ve been off sick for eight weeks.

You usually align your deferral period with how long you could last on savings, or how long your company offers full sick pay. Once your sick pay or savings run out, the policy kicks in to cover your lost earnings.

The longer your deferral period, the cheaper your policy.

Policy Cease Age

Your “cease age” is how old you’ll be when the policy comes to an end. You usually align this with your expected retirement age.

Many insurers offer a cease age of all the way up to 70. However, this will notably push up the price of cover over a cease age of 60 or 65 because the higher your cease age, the more your premiums cost.

Type of Premium

When you take out cover there are two types of premiums to consider:

• Age-banded premiums
  These premiums rise annually by a set amount laid out in your policy documents. The increase is solely linked with the fact that, as we get older, there’s a higher risk of a claim.
• Guaranteed premiums
  Fixed for the life of the policy, these can’t change with time unless you alter your cover. If you buy long term Disability Insurance when you’re young and healthy, when premiums are usually the cheapest, guaranteed premiums typically work out more cost-effective as they don’t rise with time.

However, guaranteed premiums are the most expensive option, but don’t write them off before you’ve examined all your options. For example, manual workers often get better rates with age-banded premiums.

How To Make A Claim

If you take out a policy and are unable to work due to an accident or illness, the following steps provide a simple guide on how to make a claim:

• Contact your insurer as soon as you develop a health problem that stops you working
• Fill in a claims form (most insurers let you do this online) and expect to submit evidence of your disability, for example a doctor’s note or diagnosis from a consultant
• Your claim is approved during your deferred period
• At the end of your deferred period, if you still aren’t well enough to work, your insurer starts paying your agreed monthly benefit
• You receive this benefit until you recover and return to work, reach your claims limit (for short term protection), or hit your policy’s cease age.

Neil’s Cancer Claim with British Friendly

Neil is a Drewberry client. We advised him on a British Friendly Income Protection Insurance policy. He had the policy for just four years before unfortunately needing to claim.

After a visit to his GP due to a bout of stomach pains, Neil’s GP sent him for tests. The tests revealed the terrible news that Neil had stage 2 bowel cancer and required surgery.

Fortunately the surgery was successful; however, Neil contracted postoperative sepsis. This required several weeks of hospital care. During this time, and his subsequent recovery at home, he was completely unable to work.

British Friendly paid a claim while Neil couldn’t do his job, allowing him to keep up with all of his bills, most importantly his mortgage. 🤕 Read More About Neil’s Claim

Which Insurers Pay The Most Claims?

It’s understandable to want to pick an insurer who you can trust to pay out should you need to claim. Payout rates across the industry are not only higher than many people assume but are also fairly uniform.

For example, as shown in the table below, most insurers pay more than 90% of all Disability Insurance claims they receive.

Who Are The Top UK Disability Insurance Companies

Most of the leading UK insurers offer traditional long-term income protection products.

While each provider has its own pricing and underwriting approach, it’s essential to research and compare quotes across the market to find the most cost-effective solution for your specific circumstances.

Our online cost calculator makes life easy, enabling you to instantly compare pricing from all of the following insurers 😎:

• Aegon
• Aviva
• British Friendly
• Cirencester Friendly
• Holloway Friendly
• Legal & General
• Liverpool Victoria (LV=)
• Royal London
• Shepherds Friendly
• The Exeter
• Vitality.

Doing thorough research is even more important if you have existing health conditions, work in a high risk occupation, are self-employed or run your own company.

There are some smaller providers who focus on specific niches which you might not come across unless you speak to an expert adviser. If you need help doing your research give us a call on 02084327333 or email help@drewberry.co.uk.

Additional Benefits Of Disability Insurance

Another important area of comparison is the additional benefits on offer from various insurers. These are services available, almost always for free, alongside Disability Insurance.

Insurers offer these benefits with your wellness in mind. They’re there to help reduce the chances of you needing to claim or to speed up your recovery if you do fall ill.

Depending on your insurer, additional benefits may include:

• Virtual GP appointments
• Medical helplines, offering convenient telephone access to trained doctors and nurses for advice on minor medical ailments
• A fixed number of physiotherapy sessions per year (either online or in person)
• A fixed number of counselling / cognitive behavioural therapy sessions per year (either online or in person)
• High street discounts
• Discounts on gym memberships / fitness trackers
• Hospitalisation benefit, paying out a cash benefit each day you spend as an inpatient in hospital
• Second medical opinion service, providing access to world-leading medical experts to offer a second opinion on a diagnosis or course of treatment.

Compare Disability Insurance Quotes & Get Expert Advice

With so much to consider when it comes to setting up Disability Insurance, it’s important that you don’t miss anything out.

Our experts are on hand to ensure you get the most cost-effective cover given your circumstances.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We all deserve a first class service when it comes to issues as important as protecting our health and our finances. Below are just a few reasons why it makes sense to talk to us.

• There is no fee for our service
• We are an award winning 🏆 independent insurance broker who works with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 3900 and growing independent client reviews rating us at 4.92 / 5
• Claims support when you need it most.
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐

If you’re looking to set-up disability cover or review an existing policy give us a call on 02084327333 or email help@drewberry.co.uk.