Where Should I Buy Income Protection?

With Statutory Sick Pay (SSP) of only £116.75 per week for up to 28 weeks and Incapacity Benefit / Employment & Support Allowance (ESA) of up to £90.50 per week thereafter the need for income protection insurance is clear.

Thus, if your employer doesn’t provide you with cover it makes a lot of sense to consider your own personal policy.

Okay, so you’ve decided you need Income Protection but how do you go about getting the right policy and at the right price? With a number of places offering this cover who should you turn to? This guide should help to explain.

Should I buy direct from an Insurer?

Some people feel more comfortable buying directly from an insurer, after all they are a brand that you’ve heard of and it often seems easier just to deal with one party.

• But how do you know which insurer to contact?
• And how do you know that insurer is right for you?

These are the main issues with going directly to an insurer as you’d need to contact a whole host of insurers to gain quotes and you’d also need to compare all the policy terms yourself.

Additionally, there are quite a few insurers that only sell their policies through advisers so you can’t really compare all the options yourself.

Going Direct You Receive No Advice and No Associated Protection

If you call the insurers to ask questions they can often only provide ‘guidance’ (i.e. they can’t actually say what would be best for you) rather than provide advice, and naturally they can only talk about their particular policy.

When you buy direct from an insurer it is considered a non-advised sale, the responsibility for the purchase sits with you. If it turns out it was not the right product or doesn’t meet your needs you have nowhere to turn.

On the other hand should you speak to an intermediary it is considered an advised sale and the responsibility lies with your adviser to make sure the policy is fit for purpose.

Should I buy from a Comparison Website?

Comparison websites can be very useful to compare quotes from competing insurers but often lack a sufficient comparison of the policy terms.

On a comparison website it’s often difficult to tell why one policy costs more than another, is it because one insurer is simply cheaper than another or is it because one policy is better than another?

Also, care is especially needed when buying Income Protection Insurance through a comparison website as many of the policies offered are Payment Protection plans (because they’re typically cheaper) rather than real Income Protection (for more information see our guide on PPI vs Income Protection).

Should I buy from a Bank or Mortgage Broker?

Despite all the financial mis-selling scandals that plagued banks from 2008 to 2014 many people still trust their bank.

Trust aside, the main issue with taking out cover through a bank is that banks often have deals to sell the policies of just one insurer, and it’s very unlikely that the provider they happen to offer is the one that’s most suitable for you at the most competitive price.

Mortgage brokers haven’t been tainted with issues of trust, and rightly so, the vast majority of mortgage advisers do a fantastic job. However, where mortgages are their main focus they often view insurance as a bolt-on product to sell rather than being a real specialist.

It’s also the case that most mortgage brokers sell insurance policies on a ‘restricted’ rather than an independent basis, so they either just use one insurer or a significantly reduced panel of providers.

Should I buy from an Independent Adviser?

There are a number of benefits of using an Independent Adviser, not only are they able to compare the prices of all insurers in the market but they are also able to provide advice and recommend which insurer would be best for you.

In other words, you are able to get an unbiased opinion about which policies provide a basic level of cover and which are more comprehensive, helping you find the best policy that fits in with your budget.

Not only that but the premium you pay is usually exactly the same as if you bought through a comparison website or went directly to an insurer.

Additionally and probably where an expert adviser adds most value is when the case gets more complicated due to medical conditions or unusual risks.

Some of us have had medical conditions, play a recreational sport or have a job that requires travel or even working at heights. All these factors can have an impact on your policy, so a good adviser will speak to the underwriters at all the insurers on your behalf to get you the best price and terms.