Barristers Income Protection

Do Barristers Need Income Protection Insurance?

Mental health issues are some of the most pressing issues for barristers and members of the court. 1 in 4 people in the UK will experience a mental health problem (mind.org.uk) per year and mental illness still remains the most common Income Protection claim.

The next most common claims are musculoskeletal disorders and cancer. Although health problems such as cancer are serious, musculoskeletal issues can be no less debilitating and are particularly common among desk workers.

If you are forced to take leave from your work to recover, without the right financial resources you may not get better in time to return to work before you run out of income.

The basic state benefits in such circumstances are typically modest and insufficient to maintain anything like your normal lifestyle.

That is why many barristers choose to make arrangements of their own and cover themselves with Income Protection Insurance.

How Does Income Protection Insurance for Barristers Work?

Should you be unable to continue your normal occupation due to accident or sickness, you would make a claim against your Barristers Income Protection policy.

This process involves contacting the claims team of your insurer and providing them with a completed claims form – which will either be available by post or online – and sufficient medical evidence of your condition.

Once your claim has been accepted, you will need to wait out your deferred period, which is the length of time during which you will need to be out of work in order to begin receiving your benefits.

After this time, your policy will start to provide you with a regular monthly income to a specified level. This normally stands at 50% to 70% of your gross earnings.

Short Or Long Term Cover
Short-term Barristers Income Protection Insurance will pay out for a maximum of 1 or 2 years per claim. Long-term policies, on the other hand, can pay out right up until your retirement. This can be useful as the average claim length for Income Protection for one of the top providers, Liverpool Victoria, is 7 years².

Barristers Must Consider Continuing Income

When setting your deferred period, it is vitally important to consider any continuing income you would have coming in after incapacity.

Given that we’ve set up a lot of insurance for barristers, we know how common it is for barristers to still be receiving monies from work undertaken prior to incapacity for around 6 months after they have to stop working as invoices trickle in.

As insurers will assess continuing income at claim stage and typically deduct this income from the benefit they pay out, it is important to set the deferred period at an appropriate length.

It is very common for barristers to set a deferred period of 6 months or longer, living off continuing income and savings during that period. Setting a deferred period of 6 months also saves on the cost of the policy, with premiums being around half as much relative to a deferred period of 4 weeks.

Income Protection Options for Barristers

Length of Cover

While it may be tempting to get the maximum level of cover to ensure enough income, remember that the more income you need from your policy the more expensive your premiums will be.

Instead, to avoid over or under insuring yourself, you should take a close look at your average monthly expenditure. You can use this amount to decide how much of a monthly benefit you would need, leaving a little bit of wiggle room in case of emergencies.

Length of Claims Period

The best Income Protection policies will pay out long-term, so after the end of your deferred period if you can’t ever work again it will keep paying up until your retirement. If you get better, the policy will continue to pay out until the point you’re well enough to return to work.

Short-term policies are a low-cost option. These will pay out for a maximum of between 1 and 2 years per claim and then stop, even if you can’t go back to work after that period.

Here, the difficult choice you need to make is to decide between lower premiums or comprehensive cover.

Deferred Period

When setting your deferred period, take into consideration that you may still have invoices coming in even if you aren’t working and insurance providers will not pay out until you have completely stopped receiving income. The best deferred period would be one that ends at around the same time as your income stops, which we recommend would be around six months.

The longer you set your deferred period, the lower the cost of your policy will typically be, which is something to think about when you choose yours.

Types of Premium

There a three common types of premiums that you will find on Income Protection policies for Barristers. The type that you choose, however, will depend on your circumstances.

Guaranteed

These premiums will stay at the same price for the entirety of your policy. While they might be the more expensive option when you take out your policy, they will not change no matter how long you have your policy.

Age Banded

These policies are tied to your age and will increase by a certain amount each year. Normally, these premiums increase at a fixed rate, usually in relation to a ‘premium table’ which shows you exactly how your premiums will change each year. These premiums can get more expensive the longer you have your policy, but these increases are predictable over time.

Reviewable

These premiums can change drastically throughout the term of your policy as well as quite suddenly. This type of premium involves your provider reviewing your policy each year and adjusting your premiums in accordance with any changes to you, your policy, or the the insurance company’s situation. This means that if the company see poor investment returns or if there are changes in tax, your premiums might one year jump in price unexpectedly. We normally recommend that people avoid policies with reviewable premiums as the cost can be unpredictable.

Indexation

Particularly with the longer term policies, linking your Income Protection benefits to inflation may be worth considering to ensure they hold their value over time. However, you should note that even with guaranteed premiums, your premiums will increase with inflation as well to take into account your increasing benefit.

You should also look out for insurers who may add an additional increase to your premiums for every time that your cover is increased. Some insurance providers will increase your premiums by 1.5 or 2 times the percentage increase of your cover, which means that you may find the cost of your policy going up by more than inflation over time.

Getting Own Occupation Cover

Insurers use different definitions of incapacity to determine whether or not you are entitled to your Income Protection benefits. These are something to be aware of when buying Income Protection as a barrister.

Own Occupation

This is the best definition available and should be the one that you look out for when applying for your policy. Having this definition of incapacity applied to your policy means that as long as you are unable to perform your duties in your specific occupation, you can be defined as ‘incapacitated’ and are entitled to make a claim.

This can be highly beneficial if, for example, you injure your throat and are unable to speak. In another occupation, this may be a minor injury and not necessary to your role, which means that the insurer will not pay out as you could go and do a job you’re suited for elsewhere not using your voice.

But, because the ability to speak is highly relevant to your occupation as a barrister, an Income Protection policy underwritten on an own occupation basis would pay out because you are unable to properly perform your occupational duties.

If you have a long-term policy, you can also continue claiming on your policy until you are fully capable of returning to your original occupation.

Suited Occupation

This definition doesn’t provide as much cover as ‘own occupation’. With this definition, you would be able to claim and continue claiming as long as you are incapable of performing typical duties in your occupation as well as in occupations that you are suitably qualified for.

This can cause issues as it may be the case that your insurer will refuse to pay out if they believe that you are capable of returning to work, even if you only capable of taking on a lower paying job role rather than returning to your pre-incapacity occupation as a barrister.

Any Occupation/Activities of Daily Living

These definitions of incapacity are normally used to cover professionals in ‘high risk’ occupations, but you may still need to keep an eye out for it when applying for your policy. The use of this definition means that you must be incapable of doing the duties of any occupation before making a claim. Naturally, this is highly subjective.

Your insurer will give you a list of typical daily activities such as walking, climbing stairs, lifting a certain weight, washing, dressing and feeding yourself etc. In order to have your claim approved, you will have to be injured or ill to the point that you are unable to perform at least 3 of these tasks.

Compare Top 6 UK Income Protection Insurers

	Aegon Aegon was founded as Scottish Equitable in 1831 in Edinburgh and is still based there. It provides cover on an own occupation basis for the vast majority of occupations. In 2017, Aegon won the Moneyfacts Best Protection Service Award at the Investment Life & Pensions Awards. Maximum benefit: 55% of gross income up to £150,000 per year Maximum entry age: 59 Deferred period: 4 / 8 / 13 / 26 / 52 weeks
	Aviva Aviva is the UK’s largest insurer. It provides cover on an own occupation basis for the vast majority of occupations and offers either guaranteed or reviewable premiums. Maximum benefit: 55% of gross income up to £240,000 per year Maximum entry age: 59 Deferred period: 4 / 8 / 13 / 26 / 52 / 104 weeks
	Legal & General Legal & General was founded in 1836 and is today one of the best-recognised UK insurance brands. In 2015, it won the COVER Excellence Award for its Income Protection. Maximum benefit: 60% of gross income up to £200,000 per year Maximum entry age: 60 Deferred period: 4 / 13 / 26 / 52 weeks
	Liverpool Victoria Liverpool Victoria are the UK’s number one provider of individual Income Protection and one of the top providers of financial services. In 2017, it won the COVER Excellence Award for Best Individual Income Protection. Maximum benefit: 60% of gross income up to £150,000 per year Maximum entry age: 59 Deferred period: 1 / 2 / 3 / 6 / 12 months
	Royal London Royal London was founded in 1861 as a friendly society and went on to become a mutual society in 1908. It achieved a 5 star Defaqto rating for its Income Protection in 2016. Maximum benefit: 60% of gross income up to £150,000 per year Maximum entry age: 59 Deferred period: 1 / 2 / 3 / 6 / 12 months
	Vitality Launched in September 2007, PruProtect was a partnership between Discovery, a South African insurer, and Prudential. Discovery bought Prudential’s share in the business and rebranded the firm Vitality. In 2017, Vitality achieved a 5 Star Defaqto rating for its Income Protection cover. Maximum benefit: 60% of your earnings up to £2,500 per month and 50% of any earnings above, capped at £16,666 per month Maximum entry age: 59 Deferred period: 1 week or 1 / 3 / 6 / 12 months

Get Expert Income Protection Advice

In some situations, your Income Protection policy might be all that stands between you and serious financial difficulties.

That is why it is imperative to ensure that you have a policy in place that you understand and which you are confident will provide you with the cover you need.

Why Speak to Us…

We started Drewberry because we were tired of being treated like a number and not getting the service we all deserve when it comes to things as important as protecting our health and our finances. Below are just a few reasons why it makes sense to let us help.

• There is no fee for our service
• We are independent and impartial
  Drewberry isn’t tied to any insurance company, so we can provide completely impartial advice to make sure you get the most appropriate policy based solely on your needs.
• We’ve got bargaining power on our side
  This allows us to negotiate better premiums for you than you going direct yourself.
• You’ll speak to a dedicated expert from start to finish
  You will speak to a named expert with a direct telephone and email. No more automated machines and no more being sent from pillar to post – you’ll have someone to speak to who knows you.
• Benefit from our 5-star service
  We pride ourselves on providing a 5-star service, as can be seen from our 3886 and growing independent client reviews rating us at 4.92 / 5.
• Gain the protection of regulated advice
  You are protected. Where we provide a regulated advice service we are responsible for the policy we set-up for you. Doing it yourself or going direct to an insurer won’t provide this protection, so you won’t benefit from these securities.
• Claims support when you need it the most
  You have support should you need to make a claim. The most important thing when it comes to insurance is that claims are paid and quickly. We are here to support you during the claims process and make sure it’s as smooth and stress free as possible.

Taking out Income Protection can be a bit of a minefield with a few important pitfalls to avoid.

If you need any help please do not hesitate to pop us a call on 02084327333 or email help@drewberry.co.uk.

Robert Harvey
Independent Protection Expert at Drewberry

1. https://www.barstandardsboard.org.uk/media-centre/research-and-statistics/statistics/practising-barrister-statistics

2. https://www.lv.com/income-protection/useful-information/claims-paid